CFIC Introduction
On October 18, the People's Bank of China, together with the State Administration of Financial Supervision and the China Securities Regulatory Commission, issued the Notice on Matters Concerning the Establishment of Stock Repurchase and Refinancing, establishing a refinancing for stock repurchase and increase. The initial amount of refinancing increased by stock repurchase is 300 billion yuan, with an annual interest rate of 1.75% and a term of 1 year, which can be extended according to the situation.
On October 18, the People's Bank of China, together with the State Administration of Financial Supervision and the China Securities Regulatory Commission, issued the Notice on Matters Related to the Establishment of Stock Repurchase and Refinancing, establishing a stock repurchase and refinancing; On the same day, the People's Bank of China and the China Securities Regulatory Commission jointly issued the Notice on Doing a Good Job in Broker Facilitation (SFISF) for Securities, Funds and Insurance Companies, officially launching the SFISF operation. Industry experts said that this marks the implementation of the two monetary policy tools announced by the central bank to support the capital market. The initial amount of refinancing increased by stock repurchase is 300 billion yuan, with an annual interest rate of 1.75% and a term of 1 year, which can be extended according to the situation. The refinancing policy for stock repurchase and increase is applicable to listed companies under different ownership systems. Twenty-one national financial institutions, including the China Development Bank, policy banks, state-owned commercial banks, Postal Savings Bank of China, and joint-stock commercial banks, have issued loans to support the repurchase and increase of shareholdings of listed companies in accordance with policies and regulations. The 21 financial institutions make their own decisions on whether to issue loans, reasonably determine the loan conditions, bear their own risks, and the loan interest rate does not exceed 2.25% in principle. The loan funds are "earmarked and closed". 21 financial institutions are exempt from the implementation of relevant regulatory provisions if the stock repurchase and increase loans issued by financial institutions in accordance with the provisions of the notice are inconsistent with the relevant regulatory provisions such as "credit funds shall not flow into the stock market"; Credit funds other than those exempted are subject to current regulatory requirements. "In principle, the interest rate on loans issued by financial institutions shall not exceed 2.25%, which can effectively stimulate the enthusiasm of listed companies and major shareholders to repurchase and increase their shares." According to market analysts, the loan interest rate of 2.25% is a very low interest rate for listed companies and major shareholders, reflecting the support of the People's Bank of China for promoting the stable operation of the capital market. This means that as long as the dividend ratio of listed companies is higher than 2.25%, it is profitable for listed companies and major shareholders to use loans to buy back and increase their shareholdings, which is expected to significantly stimulate their enthusiasm for buying back and increasing their holdings. In addition, the refinancing of stock buybacks and increased holdings is disbursed on a quarterly basis. From now on, 21 financial institutions can issue loans to eligible listed companies and major shareholders for share repurchase and shareholding increase, and apply for refinancing from the People's Bank of China in the first month of the following quarter after the loans are issued. For eligible loans, the People's Bank of China issues refinancing to financial institutions at 100% of the loan principal. On October 18, the People's Bank of China (PBoC) and the China Securities Regulatory Commission (CSRC) jointly issued the Notice on Doing a Good Job in Doing a Good Job in the Swap Facility for Securities, Funds and Insurance Companies (SFISF), clarifying the business processes, operational elements, rights and obligations of both parties to the transaction to all parties involved in the swap facilitation operation. At present, there are 20 securities and fund companies that have been approved to participate in the convenient operation of swaps, and the first batch of applications has exceeded 200 billion yuan. From now on, the People's Bank of China will officially launch operations according to the needs of participating institutions to support the stable development of the capital market. The above 20 securities and fund companies are CITIC Securities, CICC, Guotai Junan, Huatai Securities, Shenwan Hongyuan, GF Securities, Caitong Securities, Everbright Securities, Zhongtai Securities, Zheshang Securities, Guosen Securities, Orient Securities, Galaxy Securities, China Merchants Securities, Orient Wealth Securities, China Securities Construction Investment, Industrial Securities, China Asset Management, E Fund and Harvest Fund. "The swap facility can greatly enhance the financing capacity of non-bank institutions and continue to bring incremental funds to the stock market." Industry insiders said that participating institutions will exchange illiquid bonds and stocks for treasury bonds and central bills through swap facilities, the latter as high-grade liquid assets, which can significantly improve the availability of repurchase financing, and the funds obtained will be used for investment and market making in stocks and stock ETFs. Some major state-owned banks have indicated that they are willing to facilitate the relevant repurchase financing under the swap facility and relax the credit line requirements for repurchase financing of participating institutions.
Source of this article: China Securities Journal
Reporter: Peng Yang
A number of brokerages are actively involved in the work related to the facilitation of swaps
On October 18, the People's Bank of China and the China Securities Regulatory Commission jointly issued the Notice on Doing a Good Job in the Swap Facility for Securities, Funds and Insurance Companies (SFISF), clarifying the business processes, operational elements, rights and obligations of both parties to the transaction to all parties involved in the swap facilitation operation. At present, a total of 20 securities and fund companies have been approved to participate in the swap facilitation operation. A number of brokerages told the China Securities Journal that they are actively participating in the work related to the facilitation of swaps. In the view of industry insiders, the creation of swap facilities is conducive to stabilizing the capital market, boosting investor confidence, and enhancing market liquidity and trading activity. For non-bank financial institutions that participate in swap facilitation operations, this tool is also conducive to increasing their own business volume and enhancing profitability, thereby increasing the value of their investments. A number of securities firms responded positively It is reported that the People's Bank of China has entrusted a specific primary dealer for open market business (China Bond Credit Enhancement Corporation) to carry out swap transactions with securities, funds and insurance companies that meet the conditions of industry regulatory authorities. Available collateral includes bonds, equity ETFs, CSI 300 constituent stocks and public REITs, etc., and the discount rate is set according to the risk characteristics of the collateral. At present, there are 20 securities and fund companies that have been approved to participate in the swap facilitation operation, and the first batch of applications has exceeded 200 billion yuan. A number of relevant brokerages told reporters that the company is currently actively participating in the relevant work of swap facilitation. The relevant person in charge of CICC told reporters that the swap facility is a major innovative tool in the capital market launched by the People's Bank of China for the first time, which is of great significance for the long-term stable development of the capital market. CICC, as a primary dealer in the open market, has received the Notice, and the company will resolutely implement the central government's deployment, quickly do a good job in various safeguard work, and actively apply to participate in the first batch of swap facilitation business operations. CITIC Securities has also obtained the qualification of a primary dealer in the open market business, and the company told reporters that it will resolutely implement the requirements of the "Notice" and is actively participating in the work of swap facilitation. Among other brokerages, China Securities Construction Investment said that the company will actively respond to the central government's call to "boost the capital market", strictly implement the requirements of the "Notice", do a good job in business planning, actively participate in the work related to swap facilitation, and help the healthy and stable development of the capital market; The relevant person in charge of China Galaxy Securities said that the company will resolutely implement the requirements of the "Notice" and is actively participating in the work of swap facilitation; GF Securities said that it has received the Notice and will quickly implement the relevant needs and actively participate in the first batch of swap facilitation business operations; Guosen Securities, Everbright Securities, and Zheshang Securities all said that the company has been approved to participate in the swap facilitation operation; Caitong Securities, Orient Securities, and Guotai Junan all announced that they had received a reply from the China Securities Regulatory Commission, and the China Securities Regulatory Commission had no objection to the company's participation in the swap facilitation. Boosting the market is good for the development of non-bank financial institutions, and insiders believe that as one of the two major monetary policy tools created by the central bank to support the capital market, the swap facility can not only play a role in the liquidity of the stock market in the extreme environment, but also build a set of conventional mechanisms for the central bank to directly affect the liquidity of the stock market, and is expected to further enhance the enthusiasm of financial institutions for equity investment. Yang Chao, chief analyst of China Galaxy Securities Strategy, believes that the creation of swap facilities is conducive to the influx of incremental funds into the stock market, stabilizing the capital market, and also helping to boost investor confidence and enhance market liquidity and trading activity. "The liquidity of bonds, stock ETFs, CSI 300 constituent stocks and other assets held by securities, funds and insurance companies is relatively lower than that of high-liquidity assets such as treasury bonds and central bank bills. Yang Chao said. The swap facilitation is also a big benefit for the development of non-bank financial institutions themselves. Wang Weiyi, chief analyst of non-bank finance at Ping An Securities, believes that the swap facility is limited to stocks, stock ETF investment and market making, which will help increase the liquidity of the stock market, and at the same time give autonomy to non-bank financial institutions, which will help revitalize the stock assets of non-bank financial institutions, improve the efficiency of capital use, and give full play to the professional ability of market institutions to choose opportunities and choose the time, or will increase the investment income of non-bank financial institutions. At the industry level, the securities industry is recommended, whose valuation and performance have beta attributes; The valuation of the insurance sector is still at the bottom, and we are optimistic about the long-term allocation value of the industry.
Source of this article: China Securities Journal
Author: Hu Yu
WeChat editor: Liu Sile
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