China’s central bank moved to jolt stock markets with a 50-billion-yuan swap operation using its recently set up facility that lets brokers, asset managers and insurance companies exchange assets with poorer liquidity, writes South China Morning Post.
“The swifter move in monetary policies reflects that the growth pressure has reached a tipping point, and [it serves as a] green light from the high government level to roll out stimulus,” said Gary Ng, a senior economist at French investment bank Natixis, speaking to SCMP.
Twenty institutions participated in the auction, with a fee rate set at 20 basis points, according to the central bank’s official statement. These 20 institutions include Citic Securities, Huatai Securities and China Merchants Securities, with an application amount of more than 200 billion yuan, according to the China Securities and Regulatory Commission, cited by SCMP.
The swap period is set for one year, with the possibility of an extension depending on circumstances, the commission said.