KITCHEN SINK

A complete list of the Chinese government’s stock-market stimulus (that we know about)

Obsession
China's Transition
Obsession
China's Transition

Since China’s stock markets slid by about 30% from their peak in mid-June, the government and financial firms have rushed to come up with measures to turn things around. These efforts have created roller coaster style markets that sank until July 8, appeared to turn around last week, and then started a downward slide again on Monday (July 27). China’s markets were down slightly at midday today, after falling as much at 5% in morning trading.

Here’s a complete list of the stimulus attempts that have been made public in recent weeks:

  • June 27: A surprise 25 basis point interest rate cut and lowering of the reserves banks need to keep when they lend to companies.
  • June 29: Regulators say pension funds can invest 30% of their net assets (equivalent to more than $100 billion) in equities for the first time.
  • July 1: China’s securities regulator relaxes rules on margin financing, or trading stocks with borrowed money.
  • July 3: China’s central bank extends a 250 billion RMB ($40 billion), six-month loan to state owned banks to “encourage banks to increase support” to weak parts of the economy.
  • July 4: 21 brokerages, led by Citic Securities, say they will invest $19.3 billion in a new blue-chip fund to stabilize the market, and vow not to sell any of their own proprietary equity holdings.
  • July 5: 28 firms planning IPOs on the Shanghai and Shenzhen market say they will postpone them and start refunding investors’ capital.
  • July 5: China’s central bank says it will inject an undisclosed amount of capital into China Securities Finance Corp (CSF), a state-owned company that makes margin loans to brokers.
  • July 6: Executives from mutual funds pledge to support the markets with their own capital.
  • July 8: Regulators banned company shareholders with stakes of more than 5% from selling for the next six months. China’s central bank said it would further support the margin lending provider CSF through interbank lending, bond issuance, and collateral backed financing and re-lending. China’s securities regulator also said it would increase purchases of small-cap stocks.
  • July 9: China’s banking regulator, the CBRC, said banks can now loan money to companies using stock as collateral, and ease margin requirements for wealth management customers.
  • July 9: China Development Bank and the Export-Import Bank of China said they would not sell shares, and look to buy more stock.
  • July 27: Margin lending provider CSF will continue to buy stocks to stabilize the market, and China’s stock market regulator, the CSRC, will investigate “huge stock sell-offs,” the CSRC said.

The government and the finance industry’s full-scale push shows how important stock-market performance is to Xi Jinping’s political reputation at home and abroad. But the foreign investors China has been trying to attract find these heavy-handed market interventions unsettling. July 27’s slide shows the intervention is also spooking investors at home.

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