The People’s Bank of China invites eligible financial institutions to apply for a 500 billion yuan funding scheme to bolster capital markets, following recent stock declines. Shanghai and Hong Kong indexes rose.

• 🏦 PBOC Initiative The People’s Bank of China (PBOC) has launched a funding scheme worth 500 billion yuan aimed at supporting the capital market by enabling financial institutions to leverage assets as collateral for highly liquid assets.
• 📈 Response to Market Decline This initiative comes as a response to recent declines in the stock market, seeking to stabilize and stimulate economic activities.
• 💼 Eligible Institutions The scheme is applicable to securities firms, fund companies, and insurance firms, aiming to enhance liquidity and support their operations.

PBOC Launches New Funding Scheme

The People’s Bank of China (PBOC) has initiated applications from financial institutions for a new funding scheme valued at 500 billion yuan ($70.62 billion) to support the capital market. Eligible securities firms, fund companies, and insurers can apply for the swap scheme to access funds for stock purchases. The Shanghai Composite rose 2.64% mid-day, and Hong Kong’s Hang Seng Index gained nearly 4%.

Goals and Mechanism of the Scheme

This initiative follows a sharp decline in Chinese stocks, highlighting reduced investor confidence in Beijing’s economic strategies. Announced on September 24, the scheme allows eligible entities to use assets like bonds, stock ETFs, and CSI 300 Index holdings as collateral to secure liquid assets like treasury bonds. The initial scope of the swap program could expand beyond its 500 billion yuan target.