China Assets Surge, FTSE China A50 Index Soars 300 Points

 

 

On Friday, a flurry of positive developments in the domestic market catalyzed a swift ascent across the three major A-share indexes. The ChiNext Index surged by over 3% at one juncture, while the Shanghai Composite reclaimed the 3200-point threshold within the trading session. Concurrently, the FTSE China A50 Index exhibited a robust 300-point spike, translating to a near 1% upsurge throughout the day.

Regarding economic indicators, China's GDP for the initial three quarters of the year amounted to 94.9746 trillion yuan, indicating a 4.8% year-on-year growth at constant prices. Notably, the third-quarter GDP growth rate stood at 4.6%.

 

 

 

 

Furthermore, on October 18th, the National Bureau of Statistics unveiled these figures, shedding light on the nation's economic performance amidst the prevailing market conditions.

 

 

Simultaneously, the commencement of the 2024 Financial Street Forum Annual Meeting signifies a pivotal moment for financial discourse and industry insights.

 

 

During the forum, Pan Gongsheng, Governor of the People's Bank of China, underscored the introduction of two financial tools aimed at fostering stability and growth within the capital market. In collaboration with the China Securities Regulatory Commission (CSRC) and the China Banking and Insurance Regulatory Commission (CBIRC), the PBOC has established specialized task forces to oversee the facilitation of interchanges among securities, funds, and insurance entities.

 

 

Notably, the policy directives concerning stock repurchases and specialized rediscount loans were officially unveiled during the forum proceedings.

 

 

Governor Pan Gongsheng emphasized that the interchanges among securities, funds, and insurance entities do not entail direct liquidity injections from the central bank, thereby ensuring no expansion of the monetary base or currency supply. The targeted nature of the rediscount funds provided by the central bank aims to prevent unauthorized flow of credit into the stock market, illustrating a clear regulatory boundary.

 

 

These financial tools denote an expanded role for the central bank in upholding financial stability, reflecting a blend of tradition and innovation in regulatory practices. Collaborative efforts with the CSRC will further refine these mechanisms and explore sustainable institutional frameworks to bolster market resilience and integrity.

 

 

Presently, 20 securities and fund companies have received approval to partake in the interchange operations, with an initial application quota surpassing 200 billion yuan. Effective immediately, the People's Bank of China will commence operations in alignment with the requirements of participating institutions to bolster the sustainable evolution of the capital market.

 

 

Additionally, the official rollout of the stock repurchase and specialized rediscount loan policies by the People's Bank of China marks a significant milestone in supporting listed companies of varied ownership structures. With an initial quota of 300 billion yuan, an annual interest rate of 1.75%, and a one-year tenure extendable based on exigencies, this policy is set to empower 21 national financial institutions, including the National Development Bank, policy banks, state-owned commercial banks, China Postal Savings Bank, and joint-stock commercial banks, to provide strategic financial support for stock repurchases and holdings.

 

 

Moreover, in a synchronized move, the top five banks - Industrial and Commercial Bank of China, China Construction Bank, Bank of Communications, Agricultural Bank of China, and Bank of China - have revised their deposit rates. Notably, the rates for various fixed-term deposits have been reduced by 25 basis points, with the one-year rate now resting at 1.1%. Additionally, the 7-day notice deposit rate has been adjusted downward by 25 basis points to 0.45%. This marks a subsequent reduction in deposit rates by major banks within a span of less than three months since July, signifying the sixth voluntary reduction in deposit rates by these major institutions since September 2022.