China Launches Tools to Boost Volatile Stock Market

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A man walks past the People’s Bank of China in Beijing. Photo: VCG

China’s financial regulators officially launched two tools Friday for bolstering the country’s stock market, helping boost major indexes that day.

The two tools are aimed at encouraging listed companies and financial institutions to buy stocks. One tool will do this by encouraging banks to lend to listed companies to buy back shares, while the other is a swap facility that will allow eligible institutions to access highly liquid central bank assets, which they can use to fund stock purchases.

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China launched two financial tools to boost the stock market, encouraging listed companies to buy back shares with bank loans and enabling institutions to fund stock purchases through a swap facility.
The initial round involves 300 billion yuan in reloans at a 1.75% interest rate and has so far cleared 20 institutions for participation.
Major stock indexes, including the Shanghai Composite, rallied 2.9% after the launch, supported by strong third-quarter economic data.

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