However, some analysts called for more drastic action to shore up investor confidence following more than three years of market declines.
Pan Gongsheng, the governor of the PBOC, said on Tuesday that brokers, mutual funds and insurers would be able to tap into the programme initially by using the shares they already own as collateral. He said that an additional 500 billion yuan of liquidity could be directed to the mainland’s markets if the swap programme is successful.
“I have discussed with [China Securities Regulatory Commission] chairman Wu Qing that we could consider unleashing a second round of 500 billion yuan, or the third batch of 500 billion yuan if the plan were enforced well enough,” he said. “We are taking an open attitude towards the new policy.”
Pan said top financial policymakers are also looking at creating a stabilisation fund to buoy the stock market. Analysts believe this could mean additional funding support amounting to more than 1 trillion yuan.
