China’s Third SFISF Batch Deploys Rapidly: At Least 10 Brokers Buy Stocks

China’s Third SFISF Batch Deploys Rapidly: At Least 10 Brokers Buy Stocks

TREE NEWS reports: At least 10 Chinese securities firms have announced that they have completed their first stock purchases under the third batch of the Securities, Funds, and Insurance Companies Swap Facility (SFISF), a central bank tool designed to support the stock market. The rapid deployment—less than ten days from announcement to trading—underscores Beijing’s determination to stabilize equity markets and inject liquidity into the beleaguered A-share market.

What Happened

The third batch of SFISF, which allows eligible institutions to swap assets such as bonds, stock ETFs, and CSI 300 constituent stocks for highly liquid central bank paper, has entered a concentrated implementation phase. As of November 10, at least 10 brokers have publicly confirmed their first stock purchases under the facility. These include CITIC Securities, Guotai Haitong, CICC, China Galaxy Securities, China Merchants Securities, China Securities (CSC), Huatai Securities, Orient Securities, Caitong Securities, and Zheshang Securities.

The process has been remarkably swift. On November 9, CSC, Huatai, and Zheshang Securities disclosed that they had completed repurchase financing and executed their first stock purchases on the same day. Earlier, on November 6, a first group of institutions—including CITIC Securities, CICC, Guotai Haitong, Galaxy Securities, China Merchants Securities, Orient Securities, and Caitong Securities—had already completed their initial buys.

Among the 26 brokers that have confirmed winning bids in the third batch, at least 12 have disclosed detailed funding amounts. CICC leads with 163 billion yuan (approximately $22.5 billion), followed by Guotai Haitong and CITIC Securities at 100 billion yuan each. Other notable amounts include Guotou Securities at 60 billion yuan, and Dongwu, China Merchants, and Orient Securities at 50 billion yuan each. Zheshang Securities raised 40 billion yuan, Caitong 30 billion yuan, and smaller brokers like Great Wall Securities, Guolian Minsheng, and Huafu Securities raised 20 billion, 15 billion, and 12 billion yuan respectively. Fourteen other brokers, including Huatai, GF Securities, Shenwan Hongyuan, and Everbright Securities, have confirmed winning bids but have not yet disclosed amounts.

Public fund participation has expanded, with major houses such as ChinaAMC, E Fund, Bosera, and Pengyang Fund joining the third batch. However, none have disclosed specific funding amounts, likely due to their role as asset managers rather than principal investors.

Market Implications

The swift deployment of SFISF funds signals a coordinated effort by Chinese authorities to bolster market confidence. The tool, which does not create new base money but rather swaps existing assets for central bank paper, provides low-cost funding specifically for equity investments and market-making activities. This targeted approach aims to support stock prices without broad monetary easing.

• Equities: The direct buying by brokers and fund managers should provide a near-term floor for A-shares, particularly for large-cap and CSI 300 constituents. The psychological boost from such rapid action could attract retail and institutional investors back into the market.
• Bonds: The SFISF allows institutions to swap bonds for central bank paper, potentially reducing bond market liquidity and raising yields modestly as institutions reallocate assets toward equities.
• Currency: The facility does not involve direct yuan creation, so its impact on the currency is neutral to slightly positive, as it supports financial stability without expanding the money supply.
• Commodities: A stronger Chinese equity market could improve sentiment toward industrial commodities, though the fundamental demand outlook remains uncertain.
• Crypto: The move is part of broader stimulus efforts that have historically had limited direct correlation with crypto markets, but improved risk appetite in China could spill over into global risk assets, including digital assets.

Key Takeaways for Investors

• The SFISF is a targeted liquidity tool that avoids broad money printing, making it a precision instrument for market support.
• Rapid deployment demonstrates policy resolve, which may reduce downside risk for Chinese equities in the short term.
• Brokers’ willingness to deploy capital quickly suggests confidence in the policy backstop.
• Watch for further disclosures from public funds, which could add additional buying power.
• Longer term, SFISF may become a permanent low-cost funding channel for professional investors, enhancing market resilience.