Ships sail across the Huangpu River past the financial district of Lujiazui in Shanghai on September 23, 2024. (Photo by Hector RETAMAL / Agence France-Presse)
BEIJING — China’s central bank boosted support for markets Thursday by opening up tens of billions of dollars in liquidity for firms to buy stocks as part of a raft of measures by Beijing to kickstart the country’s flagging economy.
Authorities last month unveiled several stimulus policies – from interest rate cuts to relaxing home-buying rules – after struggling since the end of Covid restrictions to reignite growth and get business activity back on track.
Article continues after this advertisementThe news lit a fire under mainland and Hong Kong equities on renewed hopes that officials would finally get a grip on the issues that have dogged the economy for years, particularly a property debt crisis and tepid consumer spending.
FEATURED STORIES BUSINESS National ID gives more Filipinos ‘face value BUSINESS BIZ BUZZ: Unwinding Gogoro … quietly BUSINESS Polvoron maker seeks P500 million capital for expansionThat euphoria was dampened Tuesday as a much-anticipated news conference ended with just a pledge to meet the country’s annual growth target but no more measures and no detail on those already announced.
But on Thursday the central bank fleshed out plans to encourage “the healthy and stable development of the capital market” by opening up a “swap facility” worth 500 billion yuan ($70.6 billion) that will allow firms to access cash to buy stocks.
Article continues after this advertisementREAD: China’s latest bid to jumpstart economy: Cuts, cash, credit
Article continues after this advertisementCompanies will be allowed to use equities, bonds and other assets as collateral for “high-grade liquid assets such as treasury bonds and central bank bills,” it said.
Article continues after this advertisementThe program may be “further expanded depending on the situation,” it added.
Shanghai shares rose more than one percent in early trade and Hong Kong added more than two percent.
Article continues after this advertisementThe measures were first announced last month alongside a raft of stimulus measures that triggered a blistering rally that sent markets up more than 20 percent.
People’s Bank of China (PBoC) chief Pan Gongsheng said at the time the plans would “significantly enhance” firms’ ability to access funds to buy stocks.
Beijing also last month slashed interest on one-year loans to financial institutions, cut the amount of cash lenders must keep on hand and pushed to lower rates on existing mortgages.
China faces multiple issues including a prolonged crisis in the property sector, chronically low consumption, high unemployment among young people, and elevated local government debt.
In a bid to shore up the housing market – once a key driver of growth – several major cities including Shanghai, Guangzhou and Shenzhen have also eased restrictions on buying homes.
Analysts say more direct state support is needed to boost consumption and achieve the government’s official national growth target of about five percent for this year.
READ: China raises retirement age, now among youngest in world’s big economies
Top economic planner Zheng Shanjie this week said Beijing was “fully confident” that it would hit that goal.
“We are also fully confident in maintaining stable, healthy and sustainable development,” he added.
An analyst told Agence France-Presse the central bank had been “doing much of the heavy lifting in the latest wave of stimulus.”
“The PBoC recognizes the urgency needed to address the economic issues in China,” Heron Lim, an economist at Moody’s Analytics, said.
“But the PBoC actions are only one part of the equation in boosting sentiment,” he said. “What is required now is the action plan for fiscal support to come through.”
Traders are hoping that plan comes on Saturday, when Finance Minister Lan Fo’an is set to hold a briefing on fiscal policy in Beijing.
Subscribe to our daily newsletter
China’s State Council said Lan will outline “countercyclical adjustment of fiscal policy to promote high-quality economic development.”bighit777
READ NEXT SLMC Bonifacio Global City MAB Corp. Notice of Annual Meeting ... South Africa offers lesson on how not to shut down a coal plant EDITORS' PICK Liam Payne had cocaine in his system when he died, says official QC Mayor Belmonte highlights social services in State of City Address Kristine now a tropical storm; Signal No. 1 up in 24 areas nationwide LIVE UPDATES: Tropical Storm Kristine UPDATES: 2025 elections precampaign stories INQside Look with senatorial aspirant Tito Sotto MOST READ SC issues TRO vs Comelec resolution on dismissed public officials LIVE UPDATES: Tropical Storm Kristine DOJ chief on Sara’s attack: Now we know how unstable her mind can be AFP reprimands cadet who asked for Marcos wrist watch View comments