The financial regulatory authorities will hold a symposium. What favorable benefits will the A-share market usher in?

Caixin reporters learned that on November 2, the People's Bank of China (hereinafter referred to as "the central bank") and the China Securities Regulatory Commission (hereinafter referred to as "CSRC") will convene a meeting with a number of securities companies and fund companies to study and promote the support for the use of capital market instruments.

In addition, on November 2, the central bank, the National Administration of Financial Regulation (hereinafter referred to as "NAFR") and the CSRC will convene a meeting with banks to study and optimize the policy of re-lending for share repurchase and increase of holdings.

At 9 a.m. on September 24, 2024, the principal persons in charge of the three major financial regulatory authorities, namely the central bank, NAFR and CSRC, gathered at the press conference site of the State Council Information Office. At this extraordinary press conference recognized by the market, Pan Gongsheng, Governor of the People's Bank of China, announced three major supportive monetary policy measures, including policies to support the stock market.

Pan Gongsheng, Governor of the central bank, announced that the central bank will create the "Securities, Funds and Insurance Companies Swap Facility" and the "Special Re-lending for Share Repurchase and Increase of Holdings" to support the stock market.

"Securities, Funds and Insurance companies Swap Facility (hereinafter referred to as SFISF)" supports eligible securities, fund and insurance companies to obtain liquidity from the central bank through asset pledge.

The SFISF supports eligible securities, fund and insurance companies to swap high-grade liquid assets such as national treasury bonds and central bank bills from the central bank with assets including bonds, stock ETFs, and CSI 300 constituent stocks as collateral. The initial operation scale is 500 billion yuan, which can be further expanded according to actual conditions.

When announcing the creation of this instrument on September 24, Pan Gongsheng said frankly, "As long as this work is done well, we can have the first tranche of 500 billion yuan, then another 500 billion yuan, and even a third 500 billion yuan. I think all these are feasible, and our attitude is open."

The "Special Re-lending for Share Repurchase and Increase of Holdings" aims to guide commercial banks to provide loans to listed companies and their major shareholders for share repurchase and increasing holdings of the listed companies' stocks. For loans issued by commercial banks, the central bank will provide 100% re-lending fund support. The initial quota is 300 billion yuan.

According to Caixin's understanding, starting from September 25, 2024, some banks have issued internal notices to carry out business marketing for the "Special Re-lending for Share Repurchase and Increase of Holdings".

Documents obtained by Caixin show that in accordance with relevant rules and market conditions, the bank stipulates that the term of the special share repurchase loan and the special share holding increase loan shall not exceed three years in principle. In terms of pricing, according to the previous disclosure of the central bank, the interest rate of this re-lending instrument is 1.75%, while the interest rate of loans issued by commercial banks to customers is around 2.25%. In terms of customers, the bank will give priority to supporting customers included in its white list of listed companies; for share holding increase loans, priority will be given to stocks with stable market value, active secondary market trading and good liquidity, which are included in indices such as CSI 300, CSI 500 and CSI 1000.

According to the disclosure of the central bank, as of January 23, 2025, the "Securities, Funds and Insurance Companies Swap Facility" has been operated twice, with a total amount of 105 billion yuan; more than 300 listed companies have publicly disclosed plans to apply for share repurchase and holding increase loans, with the upper limit of the amount exceeding 60 billion yuan.

At the same time, the central bank stated that in the next stage, it will work with relevant departments to continuously optimize relevant policies, improve the convenience of using the instruments, and promote the expansion of the coverage and scale of the instruments at an appropriate time based on previous practical experience and business development status, so that relevant enterprises and institutions can obtain sufficient medium and long-term funds to increase investment at any time as needed.

In May 2025, the central bank announced that the quotas of the "Re-lending for Share Repurchase and Increase of Holdings" and the "Securities, Funds and Insurance Companies Swap Facility" will be used in combination, with a total quota of 800 billion yuan, and at the same time, the interest rates of all kinds of special structured monetary policy instruments will be reduced to 1.5%.

In addition, on April 8, 2025, the spokesperson of the central bank said in a press interview that it firmly supports Central Huijin Investment to increase its efforts to increase holdings of stock market index funds, and will provide sufficient re-lending support to Central Huijin when necessary. This is the first time the central bank has explicitly provided a liquidity backstop for the "national team" outside the two aforementioned instruments. In March 2026, the central bank once again stated that it will support Central Huijin to play a role similar to a "stabilization fund".

In the past October, the A-share market continued to adjust, the "Innovation and Startup" sector saw a deep correction, the ChiNext Index and the Sci-Tech Innovation 50 Index fell by 23.02% and 24.13% respectively, and both have fallen by more than 40% since July.

Since October, the CSRC has also continuously made statements to stabilize the stock market.

On October 10, Wu Qing, Chairman of the CSRC, presided over an expert symposium on the capital market and financial situation. The participating experts put forward specific suggestions for better promoting the stable and healthy development of the capital market, mainly including: continuously strengthening the construction of the market stabilization mechanism, further expanding the sources, channels and market entry methods of medium and long-term funds, and developing and expanding patient capital; promoting qualified listed companies to increase dividend distribution and repurchase efforts, and improving the investor return and rights protection mechanism; optimizing the issuance and listing system to support the development and growth of high-quality enterprises of different types, different industries and diverse backgrounds; strengthening transaction supervision, and enhancing cross-border risk monitoring and response; researching and reserving more incremental policy instruments, and so on.

On October 19, Wu Qing said at the opening ceremony of the 2026 Financial Street Forum Annual Meeting that we will fully respond to multiple unexpected imported risk challenges, adhere to the principle of prioritizing stability, and make every effort to maintain the safety and stability of the capital market; closely track the dynamics of domestic and foreign markets, strengthen risk research and judgment and policy instrument reserve, consolidate and improve the construction of the market stabilization mechanism, focus on strengthening risk prevention for new-type businesses, stay highly alert to new risk points such as overseas leveraged products linked to individual A-share stocks, and continuously build a solid risk breakwater for the capital market.

On the same day, the CSRC approved the registration of the first batch of 18 active ETFs, which went on sale collectively on October 23, bringing incremental funds to the market. As of October 30, 15 products have completed fundraising, including all 9 products on the Shanghai Stock Exchange that have completed fundraising, with a total fundraising amount of 180 billion yuan, more than 160,000 investors participating in the subscription, and institutional investors accounting for more than 25% of the subscription amount.

On October 30, the Party Committee of the CSRC conveyed and implemented the spirit of the 5th Plenary Session of the 20th Central Committee of the Communist Party of China. The meeting emphasized that we should deeply grasp the political nature and people-centered nature of capital market work, make every effort to stabilize the market and stabilize expectations, deepen the comprehensive reform of investment and financing, improve the whole-chain supervision system, continuously enhance the resilience and confidence of the capital market, and ensure the successful completion of all tasks of the capital market in the first year of the 15th Five-Year Plan period.

Li Qiuso, Chief Domestic Strategy Analyst of the Research Department of China International Capital Corporation, said that the recent valuation adjustment of the A-share market is mainly affected by multiple external imported risks, dominated by disturbances on the capital and sentiment sides, and the current valuation retraction range is significantly out of line with the fundamental trend. From the perspective of market stabilization, the transformation of "cheap valuation" into actual allocation behavior requires rapid improvement and reversal of investor expectations, and strengthening policy responses in areas such as stabilizing growth, stabilizing the market and stabilizing expectations.

Li Qiuso analyzed that the revenue and profit growth rates of A-share listed companies in the first three quarters were both higher than the nominal GDP (Gross Domestic Product) growth rate in the same period, the profits of non-financial enterprises were relatively robust, and booming industries such as AI (Artificial Intelligence) and energy strongly supported the overall profit. In terms of valuation, the forward P/E ratio of the CSI 300 dropped to a minimum of 11.8 times, lower than the historical average of the past ten years; the forward P/E ratio of the ChiNext Index fell to the 2.8th percentile of the past ten years, which is at an extreme historical level.

"This round of adjustment is mainly affected by overseas market fluctuations and changes in external risk appetite. The technology growth sectors that saw large gains in the previous period have a more obvious retracement due to high valuation expectations. However, short-term price adjustment does not mean a reversal of the long-term trend," Zhou Junzhi, Chief Macro Analyst of CITIC Securities, believes. "In the medium and long term, the upgrading of the technology industry is expected to drive the profit growth of listed companies, the migration of residents' asset allocation is expected to bring domestic incremental funds to the A-share market, and the internationalization of the RMB is expected to broaden the space for overseas funds to allocate Chinese assets. The three logics act on the profit side, domestic capital side and overseas capital side of the A-share market respectively."

This article is from the WeChat Official Account "Caijing Mayflower" (ID: Caijing-MayFlower), written by Zhang Wei, Tang Jun and Guo Nan, edited by Yuan Man and Yang Xiuhong, and published with authorization by 36Kr.