China's margin loan provider lowers refinancing rates for brokerages

CHINA’S state-owned margin financing loan provider said on Thursday (Oct 20) it will cut brokerages’ borrowing costs in a bid to promote stock investment, the latest measure by Beijing to help stabilise markets during the on-going Communist Party Congress.

The China Securities Finance Co (CSF), the country’s only institution that provides loans to securities firms to fund their margin lending businesses, said the rates would be cut across the board by 40 basis points. The cut would allow investors to borrow money more cheaply to buy stocks.

The move is aimed at “promoting more capital to participate in market investments, and safeguard stable and healthy development of China’s capital markets”, the CSF said in a statement on its website.

Separately, the CSF also kicked off a market-oriented reform of the margin refinancing business, allowing brokerages to borrow money at more flexible maturities, and at market-competitive rates.

The announcements come as China’s stock market is struggling to stand on its feet amid a gloomy outlook for an economy ravaged by spiking Covid cases and a prolonged property debt crisis.

China has taken a series of steps to stabilise its stock and currency markets the during the politically key Party Congress. REUTERS