China’s central bank runs a 100-billion-yuan swap operation on Tuesday to steady stocks after their worst month in a decade
The People’s Bank of China will conduct bidding under its stock-support swap facility on Tuesday, with 31 firms applying for more than 100 billion yuan, after the CSI300 suffered its worst October since early 2016.
China’s central bank is to conduct a major stock-support operation on Tuesday, opening bidding under a swap facility that could channel more than 100 billion yuan — about $15.04 billion — into the country’s struggling equity market, Reuters reported on Monday.
The operation, run by the People’s Bank of China (PBOC) under the Securities, Funds and Insurance Companies Swap Facility (SFISF), will have a one-year term that can be extended. Thirty-one brokers and fund companies have already applied for swaps worth more than 100 billion yuan, the central bank said, and the funds obtained must be used exclusively for capital-market investment, including stock and stock exchange-traded fund purchases and market-making.
It is only the third time the facility has been used since it was created two years ago. The previous two rounds, in October 2024 and January 2025, injected a combined 105 billion yuan into the market. The tool works by letting eligible firms swap relatively illiquid assets — including bonds, stock ETFs and CSI300 constituent shares — for highly liquid assets such as government bonds and central-bank bills, freeing up cash to buy shares.
The intervention follows a bruising month for Chinese equities. The benchmark CSI300 index slumped 8.5 per cent in October, its worst month since early 2016, as economic weakness and sharp corrections in technology stocks hit investor confidence. The Shanghai Composite, however, rebounded on Monday, climbing 1.1 per cent for its biggest one-day percentage gain since 27 August, as traders anticipated supportive policy.
The swap operation is part of a broader package announced on Monday by the PBOC, the China Securities Regulatory Commission (CSRC) and other regulators after a joint meeting in Beijing. The central bank is also turning its share-buyback relending scheme from a temporary measure into a standing one, and cutting the interest rate on that funding from 1.25 per cent to 1 per cent. The securities regulator, meanwhile, will remove share-buyback restrictions and extend loan coverage to help listed firms stabilise their share prices.
Officials framed the measures as a determination to defend the market after its worst monthly sell-off in a decade. The South China Morning Post reported that state-backed buyers, often called the “national team”, may have bought at least 170 billion yuan of ETFs tied to key equity gauges last month alone, and local media reports suggested two government-backed investment firms could each receive as much as 100 billion yuan in relending for equity repurchases.
The figures cited in this post were checked at 05:41 PKT on 3 November 2026, against Reuters, the South China Morning Post, The Business Times and China Daily reporting of the PBOC announcement.
For investors, the immediate question is whether Tuesday’s operation marks a floor or merely a pause in the decline. Supporters of the intervention argue that coordinated liquidity, cheaper buyback funding and looser buyback rules together send a clear signal that Beijing will not allow a disorderly slide. Sceptics note that previous swap rounds, while sizeable, did not by themselves reverse longer-term concerns about growth, property-sector weakness and technology earnings — the same forces that drove October’s sell-off.
What happens next will be watched in the bidding itself and in the market’s response. A strong take-up by the 31 applicant firms, followed by sustained buying in CSI300 constituents, would suggest the facility is working as intended. A muted response would raise pressure for further measures, possibly including larger relending or direct state purchases. Either way, Tuesday’s operation is the first concrete test of Beijing’s renewed pledge to support what officials called the “healthy development” of the capital markets.
This post is market news information only, not financial advice.
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