PBOC Holds Loan Prime Rates and Announces Measures to Facilitate Residential Property Market

Li Chen
19 May, 2024
Hong Kong

Market indexes in Shanghai and Hong Kong advanced and extended weekslong gains after the People's Bank of China announced measures to support the property market. 

The People's Bank of China lowered the down payment requirement, removed the floor on mortgage rates, and provided 300 billion yuan to regional authorities to buy unsold existing homes. 

China's central bank announced a total of 1 trillion yuan in additional financing for the property sector, which includes 300 billion yuan to support the regional government's move to expand affordable housing market activities.

The multi-prong move is likely to inject much-needed liquidity into the faltering property market, encourage buyers to acquire property, and support the regional governments' plans to provide more affordable housing. 

Benchmark indexes edged higher in Shanghai and Hong Kong in Monday's trading and extended gains of 5-week and 4-week, respectively. 

Economists and market watchers welcomed the central bank's supportive measures, but those steps are likely to fall short of reviving consumer confidence and repairing the balance sheets of troubled real estate companies. 

In addition, on Monday, the People's Bank of China left its two key lending rates steady after announcing measures to revive the property market. 

The one-year loan prime rate was held at 3.45%, and the five-year loan prime rate was held at 3.95%, meeting financial market expectations. 

A five-year rate is used as a reference rate for setting the mortgage rate, and a one-year loan prime rate is the guiding rate for consumer and business loans. 

 

China Stock Movers

The CSI 300 index added 0.2% to 3,685.63, and the Hang Seng index advanced 0.4% to 19,637.32. 

Property stocks advanced for the second day in a row after the announcement of supportive measures from the People's Bank of China. 

China Vanke soared 5.6% to HK$7.25, Longfor Group decreased 1.6% to HK$15.06, and China Resources Land edged up 0.5% to HK$32.90.

Henderson Land Development gained 3.2% to HK$27.30, and CK Asset Holdings advanced 1.6% to HK$36.35. 

Bank of China added 1.6% to HK$3.92, Agriculture Bank of China was unchanged at HK$3.81, ICBC inched higher 0.2% to HK$4.72, and HSBC Holding added 0.6% to HK$68.95. 

Tech stocks led the gainers in Hong Kong trading. 

Tencent Holdings decreased 1.4% to HK$394.60, JD.com advanced 3.2% to HK$138.20, and Meituan Holdings added 0.3% to HK$125.90.