Chinese shares rose on Monday after authorities decided on a stimulus injection to bolster slowing growth.
The People’s Bank of China decided to cut the amount of cash banks must hold as reserves by one per cent from April 20, in a move to speed up economic growth, the central bank announced on Sunday. This was the second industry-wide cut in two months.
For rural credit cooperatives and banks in towns and villages, the rate of the savings deposit reserve fund will be lowered by a further one percentage point.
The Agriculture Development Bank of China will enjoy an additional two percentage points reduction.
State-owned banks and other shareholding commercial institutions that have lent a certain ratio of their money to small and micro-sized enterprises or people related to agriculture, rural areas and farmers will qualify for a cut of an additional 50 basis points in the reserve requirement ratio.
This is in a bid to “further enhance financial institutions’ capability to join in the nation’s efforts to optimize its economic structure, help small and micro-sized enterprises, better deal with tasks related to agriculture, rural areas and farmers, and support key water conservancy projects”, according to a PBOC statement.
Chinese stocks opened mixed on Monday, with the benchmark Shanghai Composite Index up 14.05 points, or 0.33 percent, to open at 4,301.35.
The Shenzhen Component Index opened at 14,132.83, down 16.51 points, or 0.11 percent.