China announced that it would allow institutional investors the use of central bank funding to purchase stock.
Bloomberg reported that the Chinese government was now considering creating a fund to stabilize markets. The initial amount would be 800 billion yuan, or $113 billion. This money will then be invested in equities.
Pan Gongsheng, the Governor of Beijing said that Beijing would start off with a swap facility worth 500 billion Yuan and a re-lending scheme of 300 billion Yuan. However, he added that an additional 500 billion ($71.31billion) yuan could be introduced in stages.
The Hang Seng Index, which is made up of 82 companies from China and Hong Kong that are considered blue-chip, has risen 17.4% since the announcement.
HSI now has erased 13 months’ worth of losses within just two days.
Since the announcement, the CSI 300, a list of China’s 300 largest companies, has risen by 12.84 %.
Linda Lam is the head of equity consulting for North Asia in Union Bancaire Privee, Hong Kong.
What surprised the market was the PBOC’s clear funding and direction in being a strong liquidity resort for the stock market. The Chinese stock market should be enjoying a honeymoon of liquidity in the short term while China fixes more complex growth issues .”
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Sources of Images include Pixabay Creative Commons & Midjourney
As new information becomes available, this post China Abruptly Releases $113,000,000,000 Liquidity to Support Stock Market and Power Major Rally could be updated.
