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China stocks rise after interbank lending rate cut

The blue-chip CSI300 index rose 0.8 per cent, to 3,907.93.

Reuters|
Nov 18, 2019, 02.25 PM IST
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China stocks
Shanghai Composite Index added 0.6 per cent to 2,909.20.
China stocks ended Monday firmer, as investors hoped for more stimulus measures to shore up the slowing economy after a interbank lending rate cut.

The blue-chip CSI300 index rose 0.8 per cent, to 3,907.93, while the Shanghai Composite Index added 0.6 per cent to 2,909.20.

China's central bank unexpectedly trimmed a closely watched lending rate on Monday, the first such cut in more than four years and a signal to markets that policymakers are ready to act to prop up slowing growth.

Analysts say the cut also shows the central bank is keen to ease investor worries that higher retail inflation would prevent it from delivering fresh stimulus.

"I expected an easing move from the PBOC, just didn't know when," said a Hong Kong-based portfolio manager. "The (high) Consumer Price Index (CPI) was only pig CPI. Everything else is in big trouble."

China's strongest consumer inflation in nearly eight years won't deter the central bank from cutting a key interest rate next week, as slowing economic growth is a bigger concern for policymakers, traders and fund managers said.

Investors were also eyeing developments in the Sino-U.S. trade talks.

China and United States had "constructive talks" on trade in a high-level phone call on Saturday, state media Xinhua said.

U.S. President Donald Trump had not yet agreed to remove any tariffs as part of a deal, and the size of China's commitment to purchase U.S. farm products was not yet clear, Commerce Secretary Wilbur Ross said on Friday in an interview on Fox Business Network.

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.41 per cent, while Japan's Nikkei index closed up 0.49 per cent.

At 07:04 GMT, the yuan was quoted at 7.0139 per U.S. dollar, 0.1 per cent weaker than the previous close of 7.0072.

As of 07:05 GMT, China's A-shares were trading at a premium of 29.19 per cent over the Hong Kong-listed H-shares.

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