When you come across “the interest rate on relending for share buybacks and increased shareholdings has fallen to 1%,” it’s easy to wonder: Can listed companies borrow at 1% to buy their own shares? To understand, you need to see where the money goes first.

On November 2, the People’s Bank of China, the National Financial Regulatory Administration, and the China Securities Regulatory Commission held a meeting on two policy tools. Officials announced that the policy on relending for share buybacks and increased shareholdings would shift from a temporary arrangement to a long-term institutional framework, and that the relending rate would fall from 1.25% to 1%. They also clarified that financial institutions would continue to set prices according to market principles, applying a reasonable markup to the relending rate and increasing lending.

So, the 1% figure refers to the interest rate on this central bank relending facility. The actual rate listed companies and eligible share-purchasing entities pay when borrowing from banks depends on the banks’ markups and loan terms. Ordinary people cannot directly apply this figure to their own borrowing rates, mortgages, or consumer loans.

For shareholders, this change is worth noting: banks’ funding costs are falling, and the policy is shifting from a temporary arrangement to a long-term institutional framework. My view is that financing conditions will be more sustained, helping eligible entities arrange share buybacks and additional share purchases. The actual impact still needs to be assessed by tracking how the funds are used; a favorable headline alone is not enough.

Officials also disclosed that, with policy support, loan agreements totaled approximately 440 billion yuan, while cumulative disbursements exceeded 280 billion yuan. The two figures are measured differently: the first refers to loans agreed upon, and the second to loans already disbursed. Whether shares have actually been purchased after the loans are disbursed still needs to be verified through company disclosures. You cannot subtract the two figures and conclude that a certain amount is “funds awaiting entry into the market,” nor can you treat all cumulative disbursements as new buying today.

When you see a company announcement, start by noting three things: which entity is conducting the buyback or increasing its holdings, whether the actual interest rate and loan amount are disclosed, and how much has already been carried out. For company buybacks, also check their purpose: cancellation, employee share ownership plans, and other uses have different effects on the share capital. If the announcement is unclear, leave the question open until more information is disclosed rather than drawing conclusions on the company’s behalf.

Under Wallstreetcn’s original article on the policy, one reader asked whether shares would be cancelled after a buyback. It is a useful follow-up question, but it is just one comment and cannot represent the views of all investors.

Lowering financing costs has policy value. For a specific holding, you still need to assess financing, execution, and the use of funds separately, then make a judgment in light of the company’s operating conditions.

Source (verified on 2026-11-03):

https://www.pbc.gov.cn/goutongjiaoliu/113456/113469/2026110219495213912/index.html