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China stocks fall as Beijing keeps key rate unchanged; Hong Kong falls

The CSI300 index fell 0.9 per cent, to 3,920.34.

Reuters|
Sep 17, 2019, 11.18 AM IST
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China stocks
Meanwhile, China's new home prices grew at a slower pace in August as a cooling economy and existing curbs on speculative buying put a dent on overall demand.
China stocks fell on Tuesday as Beijing kept a key money rate unchanged even as recent readings pointed to further downward pressure on the world's second-largest economy.

The CSI300 index fell 0.9 per cent, to 3,920.34, by the end of the morning session, while the Shanghai Composite Index lost 1.0 per cent, to 2,999.84.

The People's Bank of China partially rolled over loans from its one-year liquidity facility but kept the lending rate unchanged, a sign it is willing to maintain adequate credit to support a slowing economy but wary of excessive stimulus.

While analysts considered it a measured move, many still expect the central bank to step up stimulus this week by guiding benchmark rates for new loans lower on Friday as central banks globally rush to loosen monetary policy.

"The PBOC may see the liquidity released via RRR cuts as providing enough liquidity to the market," said Frances Cheung at Westpac. "A stable MLF rate does not mean LPR cannot fall. There is downside to LPR given its spread over MLF and given the lower funding costs amid the RRR cuts."

The PBOC's move came after data the day before showed economic slowdown deepened in August, which reinforced views China is likely to cut some key interest rates this week to prevent a sharper slump in activity.

Meanwhile, China's new home prices grew at a slower pace in August as a cooling economy and existing curbs on speculative buying put a dent on overall demand.

The CSI300 real estate index softened 0.7 per centafter the housing price data.

Investors now await the latest developments in the Sino-US trade talks.

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