Glonghui, May 22 | UBS released a report saying that the People's Bank of China announced plans to establish a 300 billion yuan affordable housing reloan mechanism as a new monetary policy tool to support local state-owned enterprises to purchase affordable housing. Loans of 300 billion dollars will account for 60% of the total loans of 21 banks, including policy banks, large state-owned banks, and joint stock banks, which means a total of 500 billion yuan in capital. UBS believes that banks may be more willing to participate this time around. First, compared to real estate developers and project companies in the past, the current borrowers will be local state-owned enterprises or local government financing guarantee companies, which may receive support from local governments. Second, the bank expects the loan interest rate to reach around 3 to 3.5%. Additionally, where sales revenue can be used for stagnant projects, it is estimated that banks can recover potential losses of more than 700 billion yuan after the stalled project is completed and put into use. UBS maintains a constructive view of the Bank of China as policy roll-out appears to be accelerating; market valuations have taken into account negative catalysts; and attractive dividend rates protect the downside. The bank is optimistic about CMB and CNBC. If market sentiment improves further, they may have more room to rise. Among the large state-owned banks, they are optimistic about CCB and the Bank of China.