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China expands stock market support after CSI300's October decline

The central bank cut the rate on a share-buyback funding scheme to 1% and said planned swap operations could supply more than 100 billion yuan.

Electronic stock market display showing Chinese equity indices
Photo: CNA

China's central bank and securities regulator announced measures on November 2 to support equities, including additional liquidity operations and longer-term funding for share purchases. The steps followed an 8.5% October decline in the benchmark CSI300 Index, its weakest monthly performance since early 2016.

The People's Bank of China (PBOC) said planned swaps with financial institutions could channel more than 100 billion yuan into stocks. Applications from 31 brokers and fund companies already exceeded that amount.

The central bank also said its relending program for share buybacks and purchases would become a long-term mechanism rather than a temporary arrangement. The expanded program's interest rate was lowered from 1.25% to 1%.

Separately, the China Securities Regulatory Commission urged major index constituents and leading technology companies to repurchase shares and support their market value. It also said it would push some newly established exchange-traded funds to build stock holdings faster and encourage fund managers to purchase shares during a downturn.

Authorities are studying looser margin requirements to improve liquidity. The measures come as weak consumption, a prolonged property-sector debt crisis and steep technology-stock declines have undermined investor confidence.

The planned swaps would mark the PBOC's third use of a facility introduced two years ago to provide brokers, insurers and fund companies with liquidity for equity purchases. Earlier operations in October 2024 and January 2025 supplied a combined 105 billion yuan.

The Shanghai Composite Index rose 1.1% on November 2, recording its largest daily percentage advance since August 27.

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Ananya Iyer

Economy & Policy Editor

Edits and reviews stories on the economy and economic policy: growth, inflation, jobs, central banks, the IMF and World Bank, fiscal and trade policy, and regulators' rules.

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