Hong Kong stocks bounce after PBOC announces rate RRR cut, China up
By Summer Zhen
HONG KONG (Reuters) — Hong Kong stocks clocked their best day in more than two months on Wednesday after China's central bank said it will cut banks' reserve ratio, a move expected to boost sentiment after a market meltdown earlier this week, while mainland stocks also bounced.
Mounting hopes that Chinese authorities would come to the rescue of the battered market with more measures and news of Jack Ma scooping up Alibaba (NYSE:BABA) Group shares also lifted overall market sentiment. China A-shares closed higher, but before the rate cuts were announced.
Shanghai stocks, which have hit five-year lows this week fueled by concern about a weakening economy, jumped 1.8% on the day, while Hong Kong's benchmark index soared by 3.6%, having endured its most volatile start to the year since 2020 and after plunging on Monday to 15-month lows.
China's central bank will cut the reserve requirement ratio (RRR) for banks by 50 basis points from Feb. 5, governor Pan Gongsheng said on Wednesday, the first such cut for the year as policymakers intensify efforts to support a fragile economic recovery.
The move will free up 1 trillion yuan ($139.45 billion) for the market, the central bank chief told a press conference in Beijing.
«The scale of 50 bp cut is larger than expected,» said Kiyong Seong, lead Asia macro strategist at Societe Generale (OTC:SCGLY), but adding his team would like to «wait to see a full set of policy supports before concluding the impact on overall market.»
China's onshore yuan hit 7.1601, the strongest level since January 12 after the announcement.
Hang Seng China Enterprises and Hang Seng Tech jumped 4.1% and 4.2%, respectively.
The blue-chip CSI 300 Index rose 1.4%.
To be sure, the market mood
Read more on investing.com
