Live Chat

Shenzhen, China

PBOC monetary policy to loosen in bid to bolster China’s economy, stocks rally on news

Chinese stocks saw a late surge in Asia trading on Wednesday following an announcement by the country's central bank, the People's Bank of China (PBOC), signaling an imminent loosening of monetary policy to bolster the struggling economy.

Governor Pan Gongsheng revealed during a press briefing that the reserve requirement ratio (RRR) for banks would be reduced by 0.5 percentage points on February 5th. This move, affecting the amount of cash Chinese banks have to maintain in their reserves, is expected to inject 1 trillion yuan ($139 billion) in long-term liquidity into the market, Gongsheng said.

“Announcing an RRR cut in advance suggests there’s no other effective tools available to stem the market rout,” Shen Meng, managing director at Beijing-based Chanson & Co, told Bloomberg.

The decision to free up bank liquidity, thereby enabling the financial sector to increase lending, has traditionally been a tool used by the PBOC to stimulate economic growth. The announcement comes at a time when China's economy continues to face challenges in fully recovering from the impact of COVID lockdowns.

A downturn in the heavily-indebted Chinese property sector has contributed to suppressed consumer sentiment and economic activity.

Political tensions between Beijing and the West have led to a reduction in foreign direct investment and added to the economic challenges. These factors pushed the Shanghai Composite stock index near a five-year low as of the beginning of this week.

Kevin Net, head of Asian equities at Tocqueville Finance SA, told Bloomberg News:

“An RRR cut helps sentiment in the sense that the action seems more decisive. But some investors may use this as an exit opportunity if there is such short-term market rebound — unless there are more policies to address structural issues, like those with the property market.”

Choose your points of movement

Сalculate your hypothetical P/L (aggregated cost and charges) if you had opened a trade today.

Market

Shares Search
Shares
Index
Commodity
Bonds
Crypto
ETFs
Currency

Instrument

Search
Clear input
Occidental
Prosus N.V.
Porsche AG
Hermes
CAT
Thermo Fisher
Nikola Corporation
Tilray
Shell plc (LSE)
Skillz Inc
Iberdrola
DeltaAir
CrowdStrike Holdings
Golar LNG
Applied Materials
Snowflake
Royal Bank Canada
Amazon.com
Spotify
Exxon Mobil
CCB (Asia)
McDonald's
Campari
GameStop
Netflix
ON Semiconductor
Costco
Dave & Buster's
Delivery Hero SE
LUCID
Continental
Zoom Video Communications
Schlumberger
Virgin Galactic
Upwork Inc.
Cameco
JP Morgan
Fuelcell
Rivian Automotive
XPeng Inc
Wal-Mart Stores
Trade Desk
Blackstone
Vodafone
Aptiv PLC
L'Oreal
Target
Rio Tinto
Sartorius AG
British American Tobacco
Qorvo
ASOS
Cisco Systems
Nel ASA
Arista
Airbus
Apple
Pfizer
AMC Entertainment Holdings
ASML
Hubspot
Teladoc
Starbucks
SMCI
Canopy Growth
Wish.com Inc
Lockheed Martin
ProSiebenSat.1
IAG
AbbVie
Marston's
Baidu
Teleperformance
Norwegian Air Shuttle
Airbus Group SE
HSBC HK
Block
Annaly Capital
Abbott
LVMH
American Express
Novavax
GoPro
Siemens
Total
SIG
Pinterest Inc
Taiwan Semi
Etsy
Amgen
SONY
3D Systems
UPS
BlackBerry
Gen Digital Inc
Xiaomi
Quanta Services
Unity Software
NVIDIA
Anglo American
Palantir Technologies Inc
Fresnillo
Deere
Rolls-Royce
Porsche
Uber
Vir Biotechnology
American Airlines
ROBLOX Corp
Macy's
FirstRand
easyJet
DISNEY
Aurora Cannabis Inc
BP
Adidas
Boeing Co
Vonovia
Coca-Cola Co (NYSE)
Home Depot
General Electric
Coinbase Inc
ALIBABA HK
Philip Morris
General Motors
PayPal
UniCredit
II-VI
BASF
Kraft Heinz
Alphabet (Google)
Palo Alto Networks
Plug Power
Li Auto
Oracle
Roku Inc
UiPath Inc
Upstart Holdings Inc
F5 Networks
Infinera
Inditex
ZIM Integrated Shipping Services Ltd
Deutsche Bank
Hammerson
IBM
JD.com
Barrick Gold
Lemonade
MerckCo USA
Infosys
Invesco Mortgage
Comcast
Santander
Accenture
Anheuser-Busch Inbev
Visa
Mastercard
T-Mobile
SAP
Wayfair
Beyond Meat
Kuaishou
CarMax
Tesla
Lyft
Medtronic
Adobe
Morgan Stanley
Workday Inc
Blackrock
Vipshop
Meta (Formerly Facebook)
Linde PLC
Micron
Lululemon
Ceconomy
Chipotle
Gilead
Naspers
Bristol Myers
The Cheesecake Factory
Glencore plc
British American Tobacco
ChargePoint Holdings Inc
Twilio
Intel
Lloyds
CNOOC
Electrolux
Wells Fargo
Sea
PG&E
Fedex
Citigroup
Peloton Interactive Inc.
eBay
Microsoft
JnJ
Bilibili Inc
Trump Media & Technology Group
AIA
Nasdaq
Air France-KLM
Allianz
Lithium Americas Corp
Procter & Gamble
Qualcomm
AMD
New Oriental
MercadoLibre.com
Mondelez
Lumentum Holdings
Two Harbors Investment aration
AstraZeneca
Norwegian Cruise Line
Unilever
GoHealth
PepsiCo
Barclays
PETROCHINA
Goldman Sachs
Eli Lilly
HSBC
Cellnex
Berkshire Hathaway
Jumia Technologies
HDFC Bank
RTX Corp
Bayer
Bank of America
Chevron
ADT
DoorDash
Marriott
Nike
AT&T
GSX Techedu
Robinhood
Telecom Italia
Deliveroo Holdings
TUI
Freeport McMoRan
Toyota
BioNTech
Airbnb Inc
Alibaba
Verizon
Nio
Eni
Ford
Volkswagen
UnitedHealth
Shopify
China Life
Snap
Christian Dior
Conoco Phillips
Lufthansa
Tencent
Moderna Inc
Salesforce.com
Broadcom
Diageo
Toro
Cinemark

Account Type

Direction

Quantity

Amount must be equal or higher than

Amount should be less than

Amount should be a multiple of the minimum lots increment

USD Down
$-

Value

$-

Commission

$-

Spread

-

Leverage

-

Conversion Fee

$-

Required Margin

$-

Overnight Swaps

$-
Start Trading

Past performance is not a reliable indicator of future results.

All positions on instruments denominated in a currency that is different from your account currency, will be subject to a conversion fee at the position exit as well.

Shanghai Composite, Hang Seng Index extend gains on Wednesday on PBOC comments

On Tuesday, reports suggested that Beijing was considering a $287 billion fund to stabilize equity markets, prompting benchmark indices to recover from lows and boosting Chinese stock markets. The Shanghai Composite gained 0.5%, while Hong Kong's Hang Seng index bounced 2.6% from a 14-month trough.

Following the PBOC's announcement on Wednesday, those gains extended, with the Shanghai Composite rising by 1.8% and the Hang Seng surging by 3.6%. The Hong Kong-traded ChinaAMC CSI 300 Index ETF also saw a rise of 2.23%. In premarket trading, the U.S.-traded iShares MSCI China ETF saw a 2.8% increase.

In a comment cited by MarketWatch, former PIMCO CEO Mohamed El-Erian, currently an adviser to Allianz and Gramercy, noted that the PBOC's policy measure underscores the significant pressure China's policymakers are under to stimulate the economy.

He added:

“This measure is likely to have only a marginal impact on growth prospects. Supplementing it with other — fiscal-based — stimulus measures would do more to boost growth…”


Zhiwei Zhang, president and chief economist at Pinpoint Asset Management Ltd., broadly agreed with El-Erian in a comment to Bloomberg:

"[The RRR cut is] another step in the right direction, but monetary policy by itself is not enough to boost economic momentum. A more proactive fiscal stance focusing on consumption is more important and effective.”

When considering shares and indices for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.

Latest news

Wall Street's leading indices notch fresh records ahead of US inflation data release later today

Thursday, 10 October 2024

Indices

Wall St. soars to new highs ahead of US inflation report

Wednesday, 9 October 2024

Indices

Hang Seng index surges, breaking 21,000 mark

Wednesday, 9 October 2024

Indices

Dow Jones index today: Dow Hit Record Closing Highs

Wednesday, 9 October 2024

Indices

Nvidia stock surges 4% in Tuesday, notching its fifth straight day of gains

Live Chat