(Yicai) Oct. 8 -- Shares of Balance Medical Technology surged after the medical devices maker said its chief executive officer is the first to take advantage of China’s new policy allowing companies and major shareholders to use special loan funds to buy back shares.

Balance Medical [SHA: 688198] surged 20 percent, its exchange-imposed daily trading limit, to close at CNY139.18 (USD19.73) a share today. The benchmark Shanghai Stock Exchange Star 50 Index [SHA: 000688] surged 17.3 percent.

Jin Lei plans to use the special loan funds to buy between 100,000 and 2.13 million shares of Balance Medical over the next six months, with no upper or lower limits on the price paid each time, the Beijing-based company said late yesterday.

Per the bourse rule limiting ownership to 75 percent, the most Jin can acquire is a further 1.55 percent since he and related parties already own 73.4 percent.

To restore confidence in the capital markets and buoy economic growth, the People’s Bank of China, the China Securities Regulatory Commission, and other of the country’s financial regulators introduced a series of new policies on Sept. 24, including the special relending mechanism to fund share buybacks.

The initiative encourages commercial banks to offer low-interest loans to listed companies, including state-owned, private, and mixed-ownership businesses, and their major shareholders to support stock repurchases.

The initial quota for the special loans is set at CNY300 billion (USD42.5 billion), with the potential for an additional CNY300 billion if the scheme works well, PBOC Governor Pan Gongsheng pointed out, adding that even more tranches could be considered.

Since Sept. 24 Chinese stocks have skyrocketed following a prolonged slump, with major indices notching up significant gains. Balance Medical's shares soared 21 percent between then and Sept. 30, before the market ceased trading for the seven-day National Day holiday that ended yesterday, with the STAR 50 Index surging around 36 percent in the same period.

Balance Medical focuses on the research and production of animal-derived interventional medical devices. Its products are used in heart valve replacement and repair, congenital heart disease interventions, and soft tissue surgical repairs in over a hundred renowned hospitals across China.

Editors: Tang Shihua, Martin Kadiev