PBOC and watchdogs set for Monday talks on market support after record run of losses

Equities in mainland China and Hong Kong get their first chance on Monday to respond to the reports, and expectations of government support could lift opening sentiment following October's steep declines. How long that holds will probably come down to specifics. Market participants have watched last month's measures do little to stop the drop, meaning the size and conditions of any expanded relending facility carry more weight than the announcement itself. A believable rescue package might also take some heat off the yuan and regional risk appetite. If no firm measures emerge, shrinking PMI readings and uncertainty over AI profits keep the bearish scenario intact.

Following a historic slide in Chinese equities, Beijing seems to be pulling together additional support levers, even though the previous month demonstrated that a mere hint of action won't suffice.

Key points:

• Chinese media reports say the People's Bank of China is set to join financial and securities regulators plus major banks on Monday to weigh support tools.
• The discussions are expected to centre on enhancing a relending programme that supports share buybacks and stake increases.
• Several securities firms and funds have reportedly been informed about the meeting, and people in the industry view it as preparation for more stabilisation efforts.
• The CSI 300 dropped 8.5% in October, pushing it into a bear market, with a record 12th consecutive weekly loss and the steepest monthly decline in over 10 years.
• Last month's policy moves have failed to halt the decline, with a sluggish economy, concerns about AI earnings and October PMIs back in contraction territory.

The People's Bank of China is scheduled to sit down with the nation's financial regulators and top banks on Monday to talk over measures to bolster the stock market, Chinese media report, as officials come under growing pressure to check a sharp fall in share prices.

According to financial publication Cailian, which cited industry sources on Sunday, the central bank will sit down with the National Financial Regulatory Administration, the China Securities Regulatory Commission and major lenders to examine possible improvements to a relending facility for buybacks and stake increases. The programme allows companies and major shareholders to take out bank loans, with central bank funding backing the arrangement, to buy back their own shares.

The 21st Century Business Herald said some securities companies and fund houses had already been told about the gathering. According to the paper, industry observers suspect the meeting may be groundwork by regulators for additional steps to steady the market. Neither the meeting's agenda nor any specific policies have been officially confirmed.

Fresh state support would build on the measures rolled out last month to calm the stock market. Those actions have yet to shift investor sentiment, with a soft home economy and scepticism about AI profits continuing to hang over the market. The CSI 300, which tracks leading Shanghai and Shenzhen equities, lost 8.5% in October and moved into bear-market territory. That marked a record 12th consecutive weekly fall and the biggest monthly drop for Chinese stocks in over a decade.

The slide has come alongside fresh indications of economic weakness. Official PMI data published on Saturday showed both manufacturing and non-manufacturing activity moving back into contraction during October, with the factory gauge at 49.3 and the non-manufacturing index at 49.7.

Monday's talks will be closely scrutinised for clues about the size and pace of any fresh measures. A substantial enlargement of the relending scheme would indicate that Beijing is ready to devote greater firepower to the market. If the meeting delivers only minor adjustments, it risks echoing last month's outcome, when policy moves failed to turn the slide around.