THE move by China’s State margin lender to resume its shorter-term lending business and slash borrowing costs has sent a strong and positive signal to the market, analysts said.

    China Securities Finance Corp. (CSF), which lends brokerages money to fund margin financing, said late Friday that lending businesses under five terms — ranging from seven to 182 days — would all be open to brokerages starting yesterday.

    It means lending businesses under four terms, including seven, 14, 28 and 91 days, have been resumed after an 18-month suspension.

    In addition, CSF also announc- ed new rates for the lending business, which the Securities Times said amounts to a 30 percent cut in borrowing costs.

    China’s stock market jumped roughly 2 percent yesterday morning, aided by a surge in brokerage shares.

    “It’s a clear signal that regulators are ready to provide the market with easier and cheaper funding,” said Wang Yu, analyst at Pacific Securities. “Although it won’t likely translate immediately into any meaningful businesses for brokerages, it definitely boosts investor confidence, in the context of a series of new messages from the new securities chief.”

    Since Li Shiyu became new head of China’s Securities Regulatory Commission (CSRC) last month, he has hinted at a possible delay in a planned reform in initial public offerings, while there’s also rising expectation that plans to launch an emerging industry board in Shanghai would also be shelved.

    High amounts of leverage in the stock market have been cited by analysts as a major factor behind last summer’s rout, which prompted a massive and unprecedented government rescue. Despite several attempts to rally since then, major indices are only about 10 percent above their August 2015 lows.

    Outstanding margin loans, or money investors borrowed from brokerages to buy stocks, have shrunk to 837.3 billion yuan (US$129.12 billion) as of March 18, from a peak of 2.27 trillion yuan last June. (SD-Agencies)