China's version of the Plunge Protection Team is coming out swinging Monday morning, after the central bank announced earlier today that it would inject a new round of a $15 billion swap facility to rescue stocks from a vicious bear market.
After markets closed, the People's Bank of China said it would hold a one-year swap auction Tuesday, with 31 brokerages and funds applying for quotas totaling more than $15 billion. The facility lets financial firms exchange eligible assets for highly liquid central bank assets, increasing their ability to buy equities.
South China Morning Post said the 31 institutions, including securities firms and asset management companies, applied for the facility, which would allow their trading desks to buy stocks mired in a downturn since summer.
Yuan Weitao, fund manager at Xi'an-based asset management firm Guofulianhe, was quoted by Bloomberg as saying, "Today's move provides crucial incremental liquidity at a time when the market lacks fresh capital to absorb selling pressure, helping it stabilize and find a bottom. "
Weitao noted, "Rather than stepping in with large-scale funding after every sharp decline, the authorities and regulators are taking a more measured approach and allowing the market to adjust on its own." READ MORE AT SOURCE »
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