Relending Programme Spurs Buybacks: Sinopec and Muyuan Foods Take Charge
Relending Programme Ignites Stock Buybacks in China
China Petroleum and Chemical Corp (Sinopec) along with 22 other mainland-listed companies are set to invest a staggering US$1.55 billion into stock buybacks and stake increases following the launch of a central bank relending programme. This programme aims to shore up equity markets amidst ongoing concerns of deflation and sluggish economic growth.
These companies have successfully secured credit lines with commercial lenders sanctioned by the People’s Bank of China (PBOC). Sinopec is at the forefront, borrowing up to 900 million yuan to facilitate its stock repurchases, demonstrating strong market backing.
Increased Market Liquidity
- The relending facility offers loans at a low annual interest rate of no more than 2.25% from selected commercial lenders, encouraging companies to repurchase their shares.
- Muyuan Foods is notably aggressive, obtaining 2.4 billion yuan from China Citic Bank to expedite its stock buy-back strategy.
The CSI 300 Index has shown a positive response, crossing a 0.3% increase recently, reflecting the effectiveness of the government’s stimulus efforts. Moreover, the stock market's rebound underscores the importance of these funding tools in fostering investor confidence.
Summary of Mechanisms
- The relending programme is complemented by a swap facility offering brokerages access to high-liquidity assets.
- Financial institutions have actively applied for over 200 billion yuan, aiming to enhance market liquidity.
This combination of funding tools signals strong governmental support for the equities market, and as these strategies unfold, investors remain optimistic about long-term growth potential.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.