China stocks rise on rate cut

An investor cools off with a fan at a private securities company in Shanghai, China [Image: Archives]

China’s Shanghai Composite rose 1.2 per cent and Chinese firms led Hong Kong’s Hang Seng index up 0.5 per cent on Monday morning spurred by Chinese interest rate cuts.

China’s central bank on Sunday announced an interest rates cut starting May 11, the third time since November last year, to bolster the real economy.

The People’s Bank of China (PBOC) will cut the benchmark deposit and loan interest rates by 25 basis points (bps). After the cut, the one-year deposit rate will stand at 2.25 per cent, and the one-year lending rate at 5.1 per cent.

This is the third round of rate cuts by the PBOC following one in November 2014 and another in March 2015.

The cuts will lower funding costs to facilitate healthy development of the real economy and ensure a modest monetary environment amid the ongoing strategy of national economic restructuring, the PBOC said.

Ma Jun, chief economist with the research bureau of the PBOC, said the interest rate cuts should not be interpreted as the Chinese version of quantitative easing (QE).

 

Source: Agencies