China Expands Stock-Market Support as PBOC Opens Third Swap Facility Operation

China has announced a package of measures to support its stock market including a fresh central‑bank swap operation and lower‑cost financing for share buybacks as authorities seek to steady investor confidence following a sharp decline in domestic equities.

China’s People’s Bank of China (PBOC) said it would conduct its operation under the Securities, Funds and Insurance Companies Swap Facility (SFISF) on November 3. The central bank reported that 31 securities and fund companies had submitted applications for than 100 billion yuan in requested funding.

The package also makes the country’s share‑buyback and stake‑increase relending programme a long‑term policy arrangement. The PBOC reduced the relending rate from 1.25% to 1% lowering the central bank’s funding cost for the programme.

The announcements followed a month for Chinese equities. Reuters reported that the CSI 300 index fell 8.5% in October its monthly decline since early 2016.

PBOC schedules swap facility operation

The SFISF is designed to help eligible securities firms, fund managers and insurers obtain higher‑quality liquid assets by exchanging eligible collateral with the central bank. These institutions can then use the acquired liquidity to support investment in stocks and exchange‑traded funds subject to the facility’s rules.

The facility does not function as a direct purchase of shares by the PBOC. Rather it provides institutions with a way to improve their access to liquidity and increase their capacity to participate in capital markets.

The bank’s announcement stated that 31 securities and fund companies had applied for more than 100 billion yuan. The final amount for the November 3 operation should be distinguished from the application total: the amount requested by participating institutions is not necessarily the amount ultimately allocated or deployed.

The latest operation is the third since the facility was introduced in 2024. Earlier operations took place in October 2024 and January 2025 with reported amounts of 500 billion yuan and 550 billion yuan, respectively.

Share‑buyback financing becomes a long‑term arrangement

Alongside the swap facility Chinese authorities announced changes to the share‑buyback and stake‑increase relending programme.

The policy supports institutions providing eligible loans to listed companies and major shareholders for share repurchases or purchases of additional shares. Authorities said the programme would move from an arrangement to a long‑term institutional framework.

The relending rate was reduced from 1.25% to 1%. Banks are expected to continue applying their lending terms and risk assessments adding an appropriate margin to the relending rate.

Lower financing costs could make it easier for eligible companies and shareholders to borrow for repurchases or additional share purchases. However the measure does not guarantee that companies will borrow, buybacks or achieve a particular share‑price outcome.

Regulators encourage market‑support measures

The China Securities Regulatory Commission (CSRC) and other authorities also encouraged listed companies, index constituents and technology firms to make greater use of share repurchases and related market‑support tools.

These measures are intended to help improve liquidity reduce the risk of selling pressure and strengthen confidence during periods of market volatility.

Share repurchases can reduce the number of shares in circulation. May signal that a company considers its stock undervalued.. Their impact depends on factors such as the purchase size, financing costs, company fundamentals and the price at which shares are bought.

A repurchase programme is therefore not a substitute for improving business performance. Companies with earnings or uncertain outlooks may continue to face valuation pressure even when financing for buybacks becomes cheaper.

Market support meets economic concerns

The latest policy package comes as Chinese authorities continue to confront challenges that extend beyond equity‑market liquidity.

The property‑sector debt crisis, weak consumer confidence and questions about earnings remain important concerns for investors. Reuters’ analysis of the market‑support measures noted that China’s stock‑market recovery faces a challenge if company earnings remain weak.

This creates a distinction between measures that can help support trading conditions and policies that can strengthen the underlying economy.

Liquidity facilities may help eligible institutions manage funding constraints and participate in markets. Lower‑cost buyback loans may encourage some companies and shareholders to purchase shares.. These tools cannot by themselves guarantee stronger consumer demand, higher corporate profitability or a durable recovery, in property‑sector activity.

What investors will watch next

Investors are likely to monitor the amount allocated under the third SFISF operation how quickly participating institutions use the facility and whether companies announce new or expanded repurchase plans.

They will also assess whether the measures produce improvement in market participation rather than a brief response to policy announcements.

For investors China’s actions signal that authorities are prepared to use targeted financial tools to support the equity market. The longer-term direction however will depend on whether the measuresre accompanied by improvements in economic conditions, corporate earnings and investor confidence.

The latest announcements expand the policy support framework for equities. Their effectiveness will be judged not by immediate market reactions but also by whether they help create more stable conditions, for companies and investors over time.