China to expand share buyback support, cut relending rate to 1%

China's financial regulators are expanding the use of a dedicated relending facility for share buybacks and stake increases, as part of a series of measures to further stabilize the stock market.

The People's Bank of China, the country's central bank, said on Monday it would lower the interest rate on the facility from 1.25 percent to 1 percent, while making the facility a permanent policy arrangement instead of a temporary measure.

In addition, the China Securities Regulatory Commission said it will work to expand the coverage of the relending facility and encourage more high-profile share buybacks and stake increases involving major index constituents and leading technology companies with significant market influence.

Since the launch of the facility, nearly 1,000 listed companies have announced more than 1,000 loan arrangements for share buybacks and stake increases as of the end of October, with planned bank borrowing totaling up to nearly 270 billion yuan ($41 billion).

Together with 180 billion yuan in loans sought by two State-owned capital platforms, China Reform Holdings and China Chengtong Holdings Group, the total amount of loan applications has reached up to 450 billion yuan, exceeding the facility's initial quota of 300 billion yuan.