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lowering the reserve requirement ratio, lowering interest rates, lowering the interest rates on existing mortgage loans, launching a securities, fund and insurance swap facility, stock repurchase and additional lending, supporting cross-industry mergers and acquisitions and restructuring, supporting insurance companies to set up private placements... on tuesday, at a press conference held by the state council information office, the central bank, the state administration of financial supervision, and the china securities regulatory commission jointly launched a policy combination that triggered a strong rebound in a-shares and hong kong stocks.

"it really exceeded expectations." several financial institution personnel told securities times reporters that this series of policies exceeded expectations in that the timing of the introduction of monetary policy was just right, or even ahead of schedule; the innovative policy tools were unprecedented, and funds entered the market directly; and policies supporting mergers and acquisitions, market value management, and insurance private placements were worth looking forward to.

hong hao, chief economist of si rui group, told the securities times reporter: "the market is bound to react enthusiastically to the introduction of such an unexpected policy at the current point. especially the swap facility and repurchase and refinancing, it can be said that the central bank is paying you to buy stocks, and the interest rate is lower than that of government bonds. it is expected that a shares will usher in a strong rebound."

the policy package "exceeded expectations"

hong hao and other financial professionals were interviewed by the securities times reporter and believed that the policy combination exceeded expectations in the following aspects:

first, the timing of the monetary policy was just right. the shanghai composite index had previously adjusted back to around 2,700 points, market sentiment was low, and valuations were already cheap enough. previously, there were strong calls for lowering the reserve requirement ratio, interest rates, and existing mortgage rates. however, this rare simultaneous reduction exceeded market expectations, and the amount of funds released is expected to exceed one trillion yuan.

second, the innovative policy tools are unprecedented, with funds directly "transfusing" the stock market. the central bank launched a securities, fund and insurance company swap facility, with an initial scale of 500 billion yuan, and the funds can only be used to buy stocks; there is also a stock repurchase and increase holdings re-loan, with an initial scale of 300 billion yuan and a loan interest rate of 2.25%, even lower than that of government bonds.

third, there has been substantial progress in policies such as the entry of long-term funds into the market, support for mergers and acquisitions, and market value management, and relevant supporting policies will be introduced in the future.

unprecedented innovation policy tools

when interviewed, several financial industry professionals further stated that the most unexpected thing at yesterday's press conference was the two new monetary policy tools created by the central bank: the securities, funds and insurance companies swap facility and the stock repurchase and increase lending. this is expected to provide stable new capital support for the stock market. moreover, it adopts the "bond-for-bond" method, and does not increase the injection of base currency. instead, it directly transfuses the capital market, which will help the stock market to develop steadily and healthily.

first, the securities, fund and insurance swap facility supports eligible securities, funds and insurance companies to use bonds, stock etfs, csi 300 constituent stocks and other assets as collateral to exchange for high-liquidity assets such as treasury bonds and central bank bills from the central bank. this will greatly enhance the ability to obtain funds and increase stock holdings.

second, special re-loans for stock repurchase and increase holdings, that is, guiding banks to provide loans to listed companies and major shareholders to support the repurchase and increase holdings of listed company stocks. the central bank will issue re-loans to banks, providing a 100% funding support ratio, and the re-loan interest rate is 1.75%. banks are allowed to add 50 basis points on this basis, that is, the interest rate for repurchase loans and increase holdings loans is 2.25%, with an initial quota of 300 billion yuan, and the scale can be expanded in the future depending on the application situation.

third, the swap facility does not directly provide money and will not expand the scale of base money. the swap facility for securities, funds and insurance companies adopts the method of "bond-for-bond", which not only improves the financing capacity of non-bank institutions, but also does not directly provide funds to non-bank institutions and will not inject base money.

a person close to the central bank told reporters that the swap facility will greatly enhance institutions' ability to acquire capital and increase stock holdings, and that swap financing is limited to investing in the stock market, which will help securities, funds and insurance companies better play their role in stabilizing the market.

"on the one hand, the new tools will help stock market participants to revitalize their existing assets. securities, funds and insurance companies, as important investors in the stock market, will hopefully use the liquidity provided by the central bank to participate more actively in market transactions and increase market activity." gao ruidong, chief economist of everbright securities, believes that "on the other hand, stock repurchases and increased lending will help rediscover the value of listed companies. at the same time, stock repurchases are also one of the ways for listed companies and major shareholders to reward investors. the new monetary policy tools also have a very positive significance for the returns of investors, especially small and medium-sized investors."

medium and long-term funds are worth looking forward to

medium- and long-term funds are regarded as stabilizers of the capital market due to their long investment cycle, large fund scale and strong stability. this time, the pilot reform of long-term investment of insurance funds has been expanded, and other qualified insurance institutions have been supported to set up private securities investment funds; the assessment mechanism has been optimized, and insurance funds have been encouraged to carry out long-term equity investment; and financial management companies and trust companies have been encouraged to issue more long-term equity products, etc. these are all policies to promote the entry of long-term funds into the market.

"while adhering to the market-oriented and rule-of-law reform direction, china's capital market will jointly promote the high-quality development of the capital market by introducing medium- and long-term funds, activating merger and reorganization measures, and standardizing the implementation of market value management." zhang jun, chief economist of galaxy securities, said in an interview with a securities times reporter that the above measures will not only improve the overall operating efficiency of the market, but also provide more solid financial support for the high-quality development of the economy.

goldman sachs released a research report analyzing that this indicates that china is about to start a new round of policy easing to support the real economy. in the future, more demand-side easing measures may be needed, especially fiscal easing, to improve growth prospects.