China cuts stock buyback loan rate to 1 per cent
China's central bank and regulators cut stock buyback and share repurchase loan rates to 1 per cent, making the policy permanent. Over 7,000 institutions attended meetings, with 1,050 billion yuan in swap facilities and 440 billion yuan in buyback loans agreed since October 2024.
The People's Bank of China, together with the Financial Regulatory Commission and the China Securities Regulatory Commission, held consecutive meetings on securities, fund and insurance company swap facilities and stock buyback and share repurchase loans, hearing financial institutions' business progress and suggestions. The stock buyback loan policy was changed from a temporary arrangement to a long-term institutional arrangement, with the loan rate cut from 1.25 per cent to 1 per cent.
The meetings proposed that, to maintain capital market stability and enhance market resilience and confidence, the securities, fund and insurance company swap facility should be conducted in a timely manner, with the number of participating institutions further increased, swap fees appropriately reduced, and collateral and operational models optimised. Financial institutions should adhere to market-based pricing principles, reasonably add markups on the basis of the loan rate and increase loan disbursement.
The meetings said policy support would continue to be strengthened, with further optimisation of policy elements and implementation details to encourage financial institutions to make good use of policy tools and support the healthy and stable development of the capital market.
According to a PBOC press release, since the two capital market support tools were launched in October 2024, the securities, fund and insurance company swap facility has been extended multiple times, with a current outstanding balance of 1,050 billion yuan (US$145 billion). Under the policy, the contracted amount of stock buyback loans is about 4,400 billion yuan, with cumulative disbursement exceeding 2,800 billion yuan.
The meetings were attended by 23 securities and fund companies and 26 banks. Representatives from China JIC, Guotai Hai Tong Securities, CITIC Securities, Yifangda Fund, Industrial and Commercial Bank of China and China Construction Bank spoke. The State-owned Assets Supervision and Administration Commission of the State Council also participated.