China has made 2.5 trillion yuan to 3 trillion yuan ($483 billion) of funding available for government agency China Securities Finance Corp. to support the stock market, people familiar with the matter said.
The funding is to offer liquidity support to brokers and to purchase stocks and mutual funds, the people said, asking not to be named because the information wasn’t public.
Chinese stocks rose the most in a week as the government gains ground in efforts to stabilize a stock market that plummeted in the past month after a debt-fueled boom. The Shanghai Composite Index advanced 3.5 percent.
The support “shows there’s plenty of ammunition in the market,” said Zhang Qi, an analyst at Haitong Securities Co.
The money was available from the central bank’s relending facility; credit lines with commercial banks; borrowing by CSF in the interbank market; and bonds and short-term notes sold by CSF, the people said.
Banks including Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Bank of China Ltd. and China Merchants Bank Co. had each already provided credit of at least 100 billion yuan to CSF as of July 13, bank officials familiar with the matter said, asking not to be named because the information wasn’t public.
ICBC and Bank of China press officers declined to comment, while no comment was immediately available from CCB or China Merchants. The central bank didn’t respond to a fax seeking comment. No comment was immediately available from China Securities Finance.
Caijing magazine earlier reported that banks had given credit lines of as much as 2 trillion yuan to China Securities Finance.
For more, read this QuickTake: China’s Managed Markets
— With assistance by Steven Yang, Heng Xie, and Xize Kang