Market Updates

PBoC Held Rates at Record Lows Reflecting Caution Over Middle East Tensions

Li Chen
20 Aug, 2026
Hong Kong

    China's benchmark indexes rebounded from the previous session, and the central bank left its key lending rate unrevised. 

    The Hang Seng Index increased 1.1%, and the mainland-focused CSI 300 Index added 0.2% as investors awaited additional policy support. 

    The People's Bank of China held the one-year Loan Prime Rate at 3.0% and the five-year LPR rate at 3.5%, following through on the promises made last month. 

    The PBoC held its key lending rates, used as a benchmark for consumer loans and residential mortgages, at record lows after a string of weak economic indicators for July. 

    The central bank held rates at record lows for fifteen consecutive months, supporting economic activities in the face of elevated geopolitical tensions in the Middle East.  

    China's rapidly cooling economic activities are signaled by fixed-asset investment, retail sales, industrial production, the jobless rate, and new home prices, all amid weakening domestic demand growth.

    The National People's Congress Standing Committee is scheduled on August 25-28 in Beijing for further policy decisions.  

     

    China Indexes and Stocks 

    The Hang Seng Index increased 1.1% to 25,771.32, and the mainland-focused CSI 300 Index added 0.2% to 4,598.14. 

    AI- and semiconductor-linked stocks rebounded in Shanghai and Shenzhen. 

    Zhongji Innolight decreased 1.6% to HK $1,082.00; Eoptolink Technology increased 0.7% to ¥414.36; NAURA Technology edged up 0.8% to ¥718.73; and Alibaba Group Holding increased 2.4% to HK $127.20. 

     

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