China Policy Bazooka is Back
China Policy Bazooka is Back
China Bazooka is Back: PBOC Cuts Everything to Prop Stocks
China fires policy bazooka to boost economy, led by mortgage rate cut, property
China announced a suite of new heavyweight policies to boost the economy on Tuesday, including cuts to the mortgage rate for existing housing and its reserve requirement ratio, while it also planned to roll-out new tools to support the stock market.
The reserve requirement ratio (RRR) – the amount of cash that commercial banks must hold as reserves – and the mortgage rate for existing housing would be cut by half a percentage point, according to People’s Bank of China governor Pan Gongsheng.
The PBOC would also support the acquisition of real estate companies’ lands by studying measures to allow policy and commercial banks to grant loans to eligible companies to acquire the land, revitalise the stock of the land and ease the financial pressure on real estate enterprises.
If necessary, the central bank may provide policy support, Pan added.
“The reduction in existing mortgage interest rates is expected to benefit 50 million households or 150 million people, reducing household interest expenses by an average of about 150 billion yuan per year, which will efficiently boost consumption and investment,” Pan said during a joint press conference alongside Li Yunze, minister of the National Administration of Financial Regulation, and Wu Qing, chairman of the China Securities Regulatory Commission (CSRC).
The bottom line?
“PBOC… will set up a swap facility allowing securities firms, funds and insurance companies to tap liquidity from PBOC to buy stocks. Brokers, funds and insurers will be allowed to pledge assets in exchange for liquidity for funds and buy stocks; the PBOC will also set up a separate specialized refinancing facility for listed companies and major shareholders to buy back shares, raise holdings. “Beijing is greenlighting direct intervention in the stock market to prop up stocks.” - Zerohedge Link
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