China's Cash Crisis Prompts Central Bank Action

Arjun Pandit
19 Jul, 2022
New York City

Asian stocks edged lower as investors worried about the growing cash crisis with Chinese banks. 

The People's Bank of China injected more liquidity in the banking system after a growing number of regional and provincial banks restricted cash withdrawals for retail customers and the U.S. dollar withdrawal for corporations. 

Agricultural Bank of China, Shanghai Pudong Bank, and ICBC are restricting customer withdrawals. 

Mortgage boycotts are widening in China as more buyers demand the delivery of promised homes on time. 

Home owners are increasingly organizing street protests in several second-tier and third-tier cities across China as authorities crackdown on social media dissent. 

Hong Kong's Hang Seng Index declined 0.9% to 20,661.06 as the central bank took steps to shore up confidence in the housing market and prevent the cash crisis to engulfing a wider list of banks. 

The Nikkei 225 Index gained 0.7% to 26,961.68 after a 3-day weekend ahead of the Bank of Japan meeting later in the week. 

Heavy equipment makers rose in trading after the Nikkei reported that the Japanese government is likely to remove a cap on defense spending from the next fiscal year.. 

Mitsubishi Heavy Industries gained 2.5% and Kawasaki Heavy Industries jumped 5.2%. 

The Kospi edged down 0.2% to close at 2,370.97 on the worries that the central bank will lift rates higher and faster and the rate path may drive the economy into a recession. 

The Sensex in Mumbai closed higher 0.5% to 54,767.52 in a late rally on the earnings optimism and the rising demand for vehicles after the strong start of the monsoon season.