China Allocates 100 Billion Yuan for Asset Swaps to Support Stock Buying
Key Facts
The People’s Bank of China said it will conduct swap facility operations for securities firms, funds and insurance companies on November 3, 2026, allocating 100 billion yuan, equivalent to $15.04 billion. The bank said, according to Reuters, that 31 firms had applied to participate in the round. In a separate report, Reuters said the value of applications exceeded 100 billion yuan, a figure describing institutional demand that does not change the announced allocation. The operation follows an 8.5% fall in the CSI300 in October, its worst monthly performance since early 2016. The facility gives institutions a way to obtain more liquid assets by swapping less liquid assets with the central bank, enabling them to buy stocks.
The mechanism differs from a direct cash injection to buy stocks; it allows participating institutions to swap illiquid assets for liquid assets held by the central bank. Beneficiaries include securities firms, funds and insurance companies, the South China Morning Post reported. Its use comes as the CSI300 posted its sharpest monthly decline since early 2016, according to Reuters. Hao Zhou, an analyst at Guotai Haitong Securities, said the round "sends another strong signal of policymakers’ commitment to ensuring the stability of the capital market and supporting investor confidence." Zhou linked the signal to the goal of supporting confidence, while market moves at the start of the week reflected a rebound in Chinese stocks.
The Shanghai Composite rose 1.1% on Monday, November 2, its biggest daily percentage gain since August 27, according to Reuters. The rise followed October losses of 8.5% for the CSI300. The figures present a mixed picture, with a daily rebound in Shanghai alongside a sharp monthly decline in the benchmark index. The available source information did not cite a confirmed causal link between Monday’s gain and the allocation announcement. The swap operations are scheduled for the following day, November 3.
This is the third time the bank has used the facility, which was established two years ago, according to Reuters. The bank carried out two previous operations, in October 2024 and January 2025, which injected a total of 105 billion yuan into the market. A People’s Bank of China report says the previous operations supported 28 institutions in increasing their holdings of stocks and exchange-traded funds by about 82 billion yuan through the end of March 2025. The bank also says the facility was launched in October 2024 and that the second operation, in January 2025, amounted to 55 billion yuan. These records place the new round within a program that has previously provided support to institutions increasing their holdings of stocks and exchange-traded funds.
The swap facility is part of broader market-support arrangements; in May 2025, China combined its quota with that of the relending facility in a joint quota of 800 billion yuan. The quota included 500 billion yuan for the swap facility and 300 billion yuan for relending, according to the Chinese government. This framework shows that the two facilities have separate allocations within a joint quota, with swaps directed to financial institutions and relending to another funding channel. The current round comes amid continued use of the swap facility, following the 2024 and 2025 operations, which totaled 105 billion yuan. The planned round was the facility’s third use, according to Reuters.
The move coincided with weak readings for non-manufacturing activity in October, according to China’s National Bureau of Statistics. The non-manufacturing business activity index stood at 49.7 points, while the services activity index was 50.0 points. The new orders index in the non-manufacturing sector was 44.4 points. For monthly comparison, the official manufacturing index had risen to 50.1 in September from 49.8 in August, according to the Associated Press. The National Bureau of Statistics is scheduled to release the November 2026 purchasing managers’ index reading on November 30, 2026.