Financial and Technology News

China plans US$173 billion injection

China’s central bank and other regulators announced a slew of targeted measures aimed at helping companies, banks and individuals hurt by the coronavirus outbreak.
The central bank is today to supply 1.2 trillion yuan (US$172.99 billion) to money markets, the People’s Bank of China (PBOC) said in a statement yesterday.
The money would be supplied using reverse repurchase agreements to ensure liquidity is “reasonably ample” during the outbreak, it said, without sharing the tenor of the agreements.
That announcement follows a joint statement with other ministries and financial regulators on Saturday, which promised to use open market operations, the standing lending facility and other tools to ensure interbank liquidity is sufficient to keep money market rates stable.
The PBOC urged banks to increase lending to the whole economy, and said that it would give banks 300 billion yuan in relending to help them provide more money to a list of affected companies.
Banks were told they should not withdraw loans from firms affected by the virus, especially from smaller ones.
Banks should also consider rolling over loans or cutting interest rates to help affected companies, and regulators would allow those firms to delay reporting their results for last year and the first quarter of this year, the PBOC said.
The new measures follow the announcement last week that China’s biggest banks would lower interest rates for firms in Hubei Province, the center of the outbreak.
In Saturday’s statement, financial institutions were told to maintain the pace of overall credit expansion and continue to lower borrowing costs across China, especially to manufacturers, and to small and private firms.
The PBOC would “keep close contact with financial institutions and financial markets to stay fully on top of the liquidity situation and demand,” PBOC Deputy Governor Pan Gongsheng (潘功勝) said in an interview with the bank’s newspaper, Financial News, which was released at the same time as the announcement.
The PBOC would “release policy information in a timely manner and guide market expectations,” he said.
Pan also said that the central bank would temporarily waive the cap for foreign exchange settlement for companies in need, as long as it is for reasons related to the virus.
The central bank would be less strict in its checks on banks’ required reserves for the end of last month, and would facilitate companies’ use of foreign exchange to ensure that offshore borrowing is not affected and goods needed to battle the virus can be imported without problems.
Exchanges were asked to streamline corporate bond sales, including by allowing financial institutions to submit materials online, to reduce the spread of the virus.
Any private bonds or asset-backed securities sold to finance the fight against coronavirus would be approved using simplified procedures.
The effect of the outbreak would be temporary, the Chinese economy would maintain good momentum, and financial regulators have “full confidence” they can keep the economy stable in the long term, the statement said.
Investors should look at the long term and uphold the principle of value investing, and not be affected by “irrational sentiment.”
In a separate interview, China Banking and Insurance Regulatory Commission Vice Chairman Cao Yu (曹宇) also called for lower lending rates and fees and pledged to take steps to make sure firms’ financing demands were met, including by allowing banks to increase bond investment and set up more wealth-management companies.
Firms with difficulties meeting the asset-management rules by the end of this year would be given a suitable extension, Cao said.
The Shanghai Stock exchange yesterday said that it would extend its deadline for companies to release their annual financial reports for last year until April 30.
Those companies that cannot make the April 30 deadline should contact regulators, it said.
The Shanghai Stock Exchange reopens today.
Additional reporting by Reuters