China Launches Over $80 Billion Funding Initiative to Boost Capital Markets

The People’s Bank of China (PBOC) has launched a $70.6 billion initiative to strengthen its capital markets, enabling financial institutions like brokers and mutual funds to secure liquidity for stock purchases using their existing holdings as collateral.

Participants can leverage assets such as bonds and stock ETFs to obtain treasury bonds and central bank bills. Governor Pan Gongsheng indicated that if the program is successful, an additional ¥500 billion could be added ($70.6 billion), raising total liquidity support beyond ¥1 trillion.

This initiative seeks to address ongoing declines in the Chinese stock market and restore investor confidence amid broader economic challenges. Following the announcement, Chinese stock indices experienced rallies, positively affecting US and European markets.

In the crypto realm, Bitcoin initially rose in response to China’s stimulus and US interest rate cuts but later retreated due to a lack of new measures from China.

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Despite market volatility, the launch of this stimulus plan is anticipated to bolster Bitcoin’s performance, as similar past actions have led to substantial price increases.

Currently, Bitcoin is priced around $60,800. Traders are awaiting the September Consumer Price Index (CPI) report, scheduled for release tomorrow, which is expected to show a slight decrease in year-over-year inflation from 2.5% to 2.3%.

Kosta Gushterov