Policy tool extended to stabilize capital market

China's top financial regulators have convened a meeting to extend the role of a central bank tool aimed at encouraging share buybacks, signaling policymakers' increased support for listed companies' market value management to bolster stock market performance.

The People's Bank of China, the country's central bank, said in a statement on Sunday that it recently held a symposium with the China Securities Regulatory Commission, themed on the central bank's lending facility for share buybacks and shareholding increases, introduced in October, to further leverage the policy tool to stabilize the capital market.

Citing share buybacks and shareholding increases as globally recognized methods for listed companies to manage their valuation, the statement said the PBOC has continuously optimized the facility to fully meet the financing needs of listed companies for market value management.

Major revisions made to the tool, according to the PBOC statement, include lowering the self-funding ratio requirement to 10 percent, extending the maximum loan term to three years and encouraging banks to issue credit loans using the facility.

Since the facility's implementation, over 300 listed companies have announced plans to use bank loans for share buybacks and shareholding increases, with companies valued at over 10 billion yuan ($1.37 billion) accounting for more than 40 percent of the total, the statement said.

Financial institutions said they will continue to improve the comprehensive financial services for listed companies and their major shareholders, with bank loans for share buybacks and shareholding increases to become a new business growth area.

"The facility has gradually demonstrated its positive effects, contributing to market stability and boosting investor confidence," the statement said, adding that listed companies actively engaging in market value management are typically high-quality firms with solid operational performance and confident management teams.