PBoC Holds Loan Prime Rates Steady, China-controlled Funds Step Up Buying

Li Chen
20 Jun, 2024
Hong Kong

China stocks lacked momentum in Thursday's trading, and the central bank held its loan prime rates steady as widely expected but failed to announce new stimulus measures. 

The Hang Seng and the CSI 300 indexes traded down 0.5% after the Hang Seng index gained 2.9% in the previous session, the best one-day gain in three months. 

Investors welcomed the People's Bank of China's decision to hold its rates steady, but they were disappointed that the bank failed to provide additional measures to facilitate property transactions. 

On Wednesday, China's top securities regulator announced broad outlines of financial market reforms for tech start ups to encourage more new company listings and support financing activities for emerging companies.  

 

PBoC Holds Rates Steady 

The People's Bank of China held its lending rates unchanged as the second-largest economy struggles to meet its ambitious annual economic growth target of 5%.

The People's Bank of China held its one-year loan prime rate at 3.45% and its five-year loan prime rate, the reference rate for mortgage lending, at 3.95%.

The central bank last lowered the 5-year LPR rate by 25 basis points in February. 

Both lending rates are at record lows as the central bank steers the economy through the protracted property market malaise, weakening labor market, and rising capital flight. 

Earlier in the week, the central bank held its medium-term lending rate at 2.5% while draining 55 billion yuan from the banking system to retain an appropriate level of liquidity. 

 

China Stock Movers 

The CSI 300 index decreased 0.6% to 3,507.78, and the Hang Seng index dropped 0.6% to 18,312.82. 

State-owned companies were in focus in active trading for the second day in a row after China-controlled funds stepped up buying on Wednesday. 

CNOOC advanced 3.5% to HK$23.50, China Petroleum Chemical gained 1.9% to HK$4.94, and PetroChina added 2.4% to HK$7.81. 

Consumer-focused stocks headed lower on the persistent worries of weak consumer sentiment. 

Haidilao International decreased 6.5% to HK$15.26, Budweiser Brewing declined 3.3% to HK$8.82, Li Ning fell 2.5% to HK$17.86, and Shenzhou International dropped 4.% to HK$80.10. 

Real estate developers turned lower after the PBOC's rate decisions. 

China Vanke decreased 4% to HK$4.92, China Resources Land declined 0.5% to HK$27.45, and Longfor Group turned down 4.4% to HK$11.48.