China Lowered Short Term Rate, Hong Kong Indexes Hovered at 3-Month High

Li Chen
23 Sep, 2024
Hong Kong

Stocks in Hong Kong and Shanghai advanced in Monday's trading following an unexpected rate cut by the People's Bank of China. 

The Hang Seng increased 0.6%, and the mainland-focused CSI 300 index gained 0.7% in active trading. 

The People's Bank of China unexpectedly lowered its 14-day reverse repurchase rate by 10 basis points to 1.85% from 1.95%. It also injected liquidity of 74.5 billion yuan into the financial system, according to a statement released by the central bank. 

Last week, the central bank held steady 1-year and 5-year loan prime rates, despite the U.S. Federal Reserve Bank lowering its target rate range by 50 basis points to between 4.75% and 5.0%.

The latest move is likely to spur more lending to businesses and residential property developers, amid weak consumer confidence and domestic demand. 

The central bank's move comes ahead of a 7-day National Day Holiday period starting October 1. 

Last week, the Hang Seng index advanced 5.1%, the most in five months, following the receding worries of the global economic slowdown.

However, financial market indexes in mainland China continued to struggle near five-year lows as corporate earnings growth outlook remained clouded.

Indexes in India traded at new record highs and gained 0.2%, and in Australia they edged down 0.5% but hovered near recent record highs. 

In Friday's trading, benchmark indexes in New York and Europe closed mixed but extended weekly advance after the U.S. Federal Reserve lowered its target rate range and signaled possible rate declines in the year. 

Japan's financial markets are closed on Monday for a holiday. 

 

China Stock Movers 

The Hang Seng index increased 0.6% to 18,359.38, and the CSI 300 index added 0.7% to 3,223.15. 

Tech stocks led the gainers in Hong Kong following the rise in the sector in Friday's trading in New York. 

Alibaba Group gained 0.5% to HK $87.70, JD.com gained 2% to $114.80, and Tencent Holdings declined 0.5% to HK $387.0. 

Bank of China increased 1.1% to HK $3.54.0, China Minsheng Banking advanced 1.9% to HK $2.86, China Construction Construction Bank added 1.4% to HK $5.66, and Industrial and Commercial Bank of China added 1.6% to HK $4.46. 

Property developers were in focus for the second day in a row after the People's Bank of China unexpectedly lowered short-term rates. 

China Vanke gained 2.2% to HK $4.55, China Resources Land decreased 0.3% to HK $21.20, Longfor Group added 0.1% to HK $8.78, Henderson Land decreased 0.3% to HK $25.40, and Sun Hung Kai Properties added 0.7% to HK $81.95. 

Xiaomi Corp. gained 3.9% to HK $20.65 after its chief executive confirmed the company's plans to launch its popular and expensive flip phone into the global market this month. 

Kweichow Moutai increased 0.3% to ¥1,267.38 in Shanghai trading, and the liquor maker said it plans to repurchase up to 6 billion yuan of its own stock. 

Kweichow Moutai stock is trading at a four-year low amid an economic slowdown and falling wholesale prices.