The CSRC said it will work with the People’s Bank of China to enhance the effectiveness of two structural monetary policy tools. — Reuters
SHANGHAI: China’s top securities regulator says it will work on building a mechanism to stabilise the market, vowing to anchor market expectations in 2025 after a disappointing start to the new year.
The China Securities Regulatory Commission (CSRC) said stability is top of its agenda in 2025 as it pledged to make every effort to induce and maintain the market’s stabilising and positive momentum, according to a statement following its work meeting on its priorities for the year.
The CSRC said it will work with the People’s Bank of China (PBoC) to enhance the effectiveness of two structural monetary policy tools, while strengthening the construction of a market-stabilisation mechanism.
Chinese stocks rose yesterday, leading gains in the region, with sentiment also aided by a report that members of President-elect Donald Trump’s incoming economic team are discussing taking a gradual approach to ramping up tariffs.
The CSI 300 Index, an onshore benchmark, gained as much as 1.7%, on track to end a four-day losing streak.
The Hang Seng China Enterprises Index advanced more than 1%.
While the regulator didn’t provide details on how such a mechanism would work, it pledged to beef up its policy guidance, and added that it will promptly respond to market concerns.
One of the two structural monetary policy tools the CSRC referred to is a liquidity support facility that allows institutional investors to tap the PBoC for funding for stock purchases.
The second is a swap facility that lets securities firms, funds and insurance companies obtain liquidity from the central bank to purchase equities.
The initial amount of the tools is US$109bil, and could be doubled or even tripled depending on demand, governor Pan Gongsheng said earlier.
The formation of a possible state-backed stabilisation fund was among the items in Beijing’s broad stimulus package unveiled in late September to revive the economy and markets. There’s been no update on progress since then, however.
“CSRC talk of stability is a step to boost confidence, but without specifics, it’s more of a signal than a game-changer,” said Billy Leung, an investment strategist at Global X ETFs.
“Long-term stability will likely need deeper reforms. Right now, this feels like a move to steady nerves rather than spark a big market shift.” — Bloomberg
