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China rolls out rate cuts, slashes RRR to revive economy: China’s central bank, the People’s Bank of China (PBOC), is rolling out a series of broad monetary stimulus measures to jumpstart the country’s faltering growth. The PBOC slashed a key short-term interest rate and lowered the reserve requirement ratio (RRR) to its lowest point since 2018, while hinting at further RRR cuts to come.
And there’s more: The package includes reducing borrowing costs on USD 5.3 tn worth of mortgages and lowering down-payment requirements for second homes in a bid to resuscitate the country’s troubled property sector. On top of that, CNY 800 bn (USS 113 bn) is being added into the stock market to boost liquidity, with officials also looking into setting up a market stabilization fund.
Big picture: This is the first time since 2015 that China has cut both the reverse repurchase rate and the RRR on the same day, Bloomberg reports. It comes after economic growth slowed to its worst pace in five quarters, putting the country on track to miss its annual economic growth target of 5% for the second time in three years.
Will it be enough? China’s benchmark CSI 300 Index jumped 4.3% on the news, while the CNY strengthened to its strongest level in over a year. Still — some doubt the cuts will be enough to revive the real estate market, with several doubting whether the measures are enough to stimulate a property market recovery.
MARKETS THIS MORNING-
China’s Hang Seng extended its gains in the wake of the economic package, up 2.6%, and defying the lull prevalent among other Asian markets. Japan’s Nikkei was marginally down, while the Topix was up only 0.3%.
Wall Street futures are also largely flat, after the S&P 500 and Dow closed at record highs yesterday.
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TASI |
12,268 |
+1.1% (YTD: +2.5%) |
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MSCI Tadawul 30 |
1,536 |
+1.5% (YTD: -1.0%) |
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NomuC |
25,684 |
-0.2% (YTD: +4.7%) |
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USD : SAR (SAMA) |
USD 3.75 Sell |
USD 3.75 Buy |
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Interest rates |
5.5% repo |
5.0% reverse repo |
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EGX30 |
30,871 |
-0.5% (YTD: +24.0%) |
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ADX |
9,461 |
+0.1% (YTD: -1.2%) |
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DFM |
4,461 |
+0.6% (YTD: +9.9%) |
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S&P 500 |
5,733 |
+0.3% (YTD: +20.2%) |
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FTSE 100 |
8,283 |
+0.3% (YTD: +7.1%) |
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Euro Stoxx 50 |
4,941 |
+1.1% (YTD: +9.3%) |
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Brent crude |
USD 75.17 |
+1.7% |
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Natural gas (Nymex) |
USD 2.58 |
+1.1% |
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Gold |
USD 2,682.60 |
+0.2% |
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BTC |
USD 64,352.70 |
+1.8% (YTD: +52.5%) |
THE CLOSING BELL: TADAWUL-
The TASI rose 1.1% yesterday on turnover of SAR 7.5 bn. The index is up 2.5% YTD.
In the green: Red Sea (+10.0%), Sfico (+9.9%) and Acwa Power (+6.6%).
In the red: Maharah (-5.4%), Retal (-2.8%) and Dar Al Arkan (-2.6%).
THE CLOSING BELL: NOMU-
The NomuC fell 0.2% yesterday on turnover of SAR 66.3 mn. The index is up 4.7% YTD.
In the green: Mayar (+9.7%), Banan (+9.3%) and Mayar (+7.6%).
In the red: Al Qemam (-6.0%), FAD (-5.5%) and Saudi Top (-4.6%)
