China Mounts Rare All-Out Effort to Halt Stock Slide; PBOC to Inject Over CNY 100 Billion, Buyback Loan Rate Cut to 1%

The PBOC announced on Nov. 3 that it will conduct a third round of its Securities, Fund and Insurance Companies Swap Facility (SFISF), a swap operation that supplies stock-purchase funds to securities firms, fund managers and insurers. The injection could exceed CNY 100 billion (approximately $15.0 billion). It marks the third operation under the facility, which was created in 2024. A total of 31 securities firms and fund companies have applied for swaps totaling more than CNY 100 billion, and the October 2024 and January 2025 operations together supplied CNY 105 billion (approximately $15.7 billion) to the market.

The refinancing program that supports share buybacks will shift from a temporary measure to a permanent mechanism. The applicable interest rate will be cut by 0.25 percentage point, from 1.25% to 1.00% a year. The aim is to lower banks' funding costs and encourage companies to repurchase their own shares. As of late October, related loan agreements totaled about CNY 440 billion (approximately $66.0 billion), with more than CNY 280 billion (approximately $42.0 billion) actually drawn down.

The CSRC has asked index constituents and major technology companies to pursue "proactive share buybacks" to stabilize their market capitalization. It is urging some newly launched exchange-traded funds to accelerate their equity allocations and encouraging fund managers to buy stocks during market downturns. In addition, the regulator plans to revise rules to allow defensive buybacks even when the share price is below the public offering price, scrap a rule requiring a six-month waiting period after listing, and ease restrictions on the permitted acquisition period. It also introduced a measure allowing companies to allocate part of their dividend funds to buybacks and is encouraging them to secure buyback funding in advance.

On the supply-demand front, the measures also include steps to expand retail investors' buying capacity. Authorities have begun considering recalibrating indicators such as margin ratios and the valuation rates applied to collateral securities for margin trading, in a bid to expand investors' ability to purchase stocks. In January, China had just raised the margin ratio for securities lending from 80% to 100%, making this a de facto pivot toward easing. The government also plans to encourage long-term funds such as pension funds and insurers to flow into the stock market.

Market participants are divided. Zhou Hao, a Hong Kong-based analyst at Guotai Haitong Securities, described the swap operation as "a strong signal from policymakers that they will safeguard capital market stability and support investor confidence," while noting that global market volatility and external uncertainties remain a drag on sentiment. Huang Yan, a fund manager at Shanghai-based investment firm Chuyang Capital, said expanded support from financial authorities "could to some extent fuel a year-end rebound, but a policy bottom does not necessarily mean a market bottom."

The measures come against the backdrop of a prolonged slump in the property market, weak household consumption and a sharp selloff in technology stocks that has chilled investor sentiment. With the index's decline reaching a decade-level low, authorities have signaled they are prepared to mobilize both liquidity supply and regulatory easing at the same time. Whether low-cost lending and deregulation alone can sustain a recovery in investor sentiment remains uncertain, and the market is entering a phase of assessing the effectiveness of the policy response.

Note: Yen conversions of yuan amounts are rough estimates calculated at approximately ¥24 to the yuan.