China’s central bank has cut the interest rate on its share buyback and shareholding increase relending facility to 1% from 1.25%, as authorities introduce additional measures to stabilise the country’s stock market. The People’s Bank of China (PBOC) announced the reduction on November 2, 2026, following a meeting with financial regulators and representatives of banks and investment institutions. The facility will also become a permanent policy mechanism rather than a temporary support measure.
The decision comes after China’s CSI 300 Index declined 8.5% in October, marking its worst monthly performance since early 2016. Regulators are also expanding liquidity support for securities firms and fund managers, encouraging listed companies to repurchase shares and considering adjustments to margin-financing rules. The measures reflect Beijing’s efforts to restore investor confidence amid economic uncertainty, weaker consumption and concerns about the profitability of technology companies.
China Cuts Relending Rate From 1.25% to 1%
The PBOC has reduced the interest rate on its Stock Buyback and Shareholding Increase Relending facility by 25 basis points, bringing it down to 1%.
The facility provides low-cost central bank funding to banks, which can then extend loans to listed companies and major shareholders seeking to purchase shares or increase their stakes.
The programme was originally introduced in October 2024 as part of China’s efforts to support its stock market.
The latest changes include:
- Reducing the relending rate from 1.25% to 1%.
- Making the facility a permanent policy mechanism.
- Encouraging banks to increase lending under the programme.
- Expanding eligibility to additional listed companies.
- Supporting share buybacks and purchases by major shareholders.
The reduction in the funding rate is intended to make borrowing cheaper for institutions and companies using the programme.
However, the final interest rate charged to borrowers will also depend on the lending margins applied by individual banks.
Why Is China Supporting Its Stock Market?
The policy announcement follows a difficult period for Chinese equities.
The CSI 300 Index, which tracks 300 large companies listed in Shanghai and Shenzhen, fell 8.5% in October 2026. It was the index’s worst monthly decline since early 2016.
The weakness reflects several concerns affecting China’s financial markets.
1. Weak Economic Conditions
China continues to face pressure from sluggish domestic consumption and a prolonged property-sector downturn.
The property crisis has affected household confidence, investment activity and the financial position of businesses connected to real estate.
When consumers become cautious about spending, companies can face slower revenue growth, while investors may become less willing to take risks in the stock market.
2. Technology Stock Weakness
Chinese technology shares have also experienced volatility amid concerns about AI-related earnings and global market uncertainty.
Investors have been reassessing the valuations of technology companies as expectations around AI investment and profitability change.
The decline in technology stocks has added pressure to broader market sentiment because major technology companies represent an important part of China’s equity market.
3. Investor Confidence Remains Fragile
China’s regulators have been attempting to encourage a more stable stock market and attract household savings into equities.
However, repeated market declines can make retail investors more cautious about investing in shares.
The latest measures are intended to improve liquidity, encourage share purchases and signal that policymakers are prepared to support financial market stability.
China Expands Liquidity Support for Financial Institutions
Alongside the rate reduction, the PBOC is expanding its Securities, Funds and Insurance Companies Swap Facility (SFISF).
The programme allows eligible securities firms, fund managers and insurance companies to obtain liquidity from the central bank through eligible assets. The resulting funds can be used to support stock-market investment.
The PBOC said it would conduct swap operations when appropriate, increase the number of participating institutions and moderately reduce swap fees.
The China Securities Regulatory Commission (CSRC) also announced that 31 securities firms and fund managers had been approved for a third round of swap operations.
These institutions have applied for quotas exceeding 100 billion yuan, equivalent to approximately $15 billion.
The latest operation is expected to begin within days of the announcement.
The first two rounds had involved 28 securities firms and fund managers, with approximately 105 billion yuan in outstanding swap operations.
More Than 280 Billion Yuan Already Disbursed for Share Purchases
China’s existing stock-support programmes have already generated substantial lending activity.
According to figures released by the PBOC, loans supporting share buybacks and shareholding increases have reached significant levels.
| Programme indicator | Reported amount |
|---|---|
| Contracted loans for buybacks and stake increases | Approximately 440 billion yuan |
| Loans already disbursed | More than 280 billion yuan |
| Outstanding swap facility operations | Approximately 105 billion yuan |
| Applications for third swap round | More than 100 billion yuan |
| Institutions approved for third swap round | 31 |
The figures show that policymakers are using multiple channels to encourage purchases of listed shares.
The relending programme provides financing through banks, while the swap facility gives eligible financial institutions additional liquidity for market investments.
These are separate mechanisms and should not be treated as a single direct injection of the same amount into the stock market.
China Plans to Ease Share Buyback Rules
The CSRC is also planning changes to make it easier for listed companies to repurchase their own shares.
One proposed adjustment would allow companies to conduct market-support buybacks when their share prices fall below their initial public offering prices.
The regulator also plans to encourage companies with excess proceeds from earlier fundraising activities to use part of that money for share buybacks when specified market-support conditions are triggered.
Other proposed changes include:
- Expanding the circumstances in which companies can conduct market-support buybacks.
- Removing certain restrictions on the timing of buyback orders.
- Strengthening the implementation of share-price stabilisation commitments.
- Encouraging buyback programmes that result in share cancellation.
- Increasing participation by major index constituents and leading technology companies.
Share buybacks reduce the number of shares available in the market when repurchased shares are cancelled. This can increase the ownership percentage of remaining shareholders and potentially improve earnings per share, assuming profits remain unchanged.
However, buybacks do not automatically improve a company’s underlying financial performance or guarantee an increase in its share price.
China’s Stock Buyback Activity Reaches Record Levels
The regulator also highlighted the scale of existing share repurchase activity.
During the first 10 months of 2026, 645 listed companies on the Shanghai and Shenzhen exchanges disclosed 700 buyback plans with a combined planned value of approximately 237.7 billion yuan.
Actual buybacks by 747 companies reached 134.5 billion yuan during the same period.
Of the disclosed buyback plans, approximately 115 billion yuan involved share cancellations.
The figures suggest that listed companies have increasingly used buybacks as part of their capital-management and shareholder-return strategies.
Companies such as BOE Technology, CATL and Luxshare Precision have also announced or carried out significant share repurchase programmes.
The CSRC wants to encourage more listed companies to use buybacks when market conditions trigger the relevant support mechanisms.
China Encourages New ETFs to Invest More Quickly
Regulators are also attempting to strengthen demand through exchange-traded funds (ETFs).
The first batch of 18 actively managed equity ETFs reportedly raised more than 35 billion yuan by November 2.
Sixteen of the products reached their individual fundraising caps of 2 billion yuan and closed their fundraising periods.
The CSRC said it would encourage these newly established funds to accelerate the process of building their stock portfolios.
This approach is intended to bring additional institutional investment into the equity market.
Regulators are also considering the development of multi-asset index products and changes to management-fee structures for actively managed equity funds.
The Bigger Picture
China’s latest stock-market support measures show how policymakers are combining monetary tools, institutional investment and corporate share buybacks to address weak investor confidence.
The reduction in the relending rate makes financing cheaper, while the expanded swap facility provides additional liquidity to eligible financial institutions. Changes to buyback rules and ETF investment requirements are intended to encourage more sustained demand for shares.
However, policy support alone cannot guarantee a lasting stock-market recovery. China’s property-sector challenges, household consumption, corporate earnings and the outlook for technology companies will remain important factors influencing investor confidence.
The longer-term effectiveness of these measures will depend on whether they help improve market participation and corporate performance rather than simply providing temporary support during periods of volatility.
Looking Ahead
China’s third round of swap operations, involving 31 approved financial institutions and applications exceeding 100 billion yuan, will be an important development to watch. The expansion of the relending programme and the new buyback rules could also influence how listed companies and institutional investors manage their equity exposure in the coming months.
For international investors, the measures indicate that Beijing remains focused on supporting its capital markets. However, a sustainable improvement in Chinese equities will ultimately depend on economic recovery, stronger corporate earnings and the restoration of investor confidence.
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