Business
China Announces US$42 Billion Relending Scheme to Support Stock Market: 21 Banks to Enable Stock Buy-Backs and Stake Hikes
China discloses specifics of a $42 billion re-lending plan to bolster the stock market. As part of this 300 billion yuan strategy revealed last month, twenty-one banks will provide loans for stock repurchases and equity increases.
Chinese firms and principal shareholders have the opportunity to seek loans from around twenty banks to finance stock repurchases and boost ownership stakes. This comes as financial authorities roll out regulations for a relending initiative worth 300 billion yuan (US$42.2 billion). This measure is a component of their financial strategies to strengthen the stock market.
The re-lending program is one of two new financial schemes, together valued at 800 billion yuan, introduced by the head of PBOC, Pan Gongsheng, in the previous month to fortify China's onshore stock market worth US$9.6 trillion. The central bank disclosed the specifics of a 500 billion yuan swap facility last week, the objective of which is to assist brokerage firms, fund companies, and insurers in exchanging their stock holdings for other liquid assets with the PBOC.
BNP Paribas stated in a report this week that if these new policy instruments are properly executed, they could introduce additional funding into the market and improve returns for shareholders, which could in turn lead to a reassessment of market values.
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