China's stocks rise for 6th session after big mortgage rate cut

China Renaissance Holdings

20/02/2024 08:59

(Updates to market closing levels)
       SHANGHAI, Feb 20 (Reuters) - China's stocks closed up on
Tuesday, rebounding from losses in early trade, after the
country announced its biggest ever reduction in the benchmark
mortgage rate to prop up the struggling property market and
broader economy.
    The blue-chip CSI300 Index  .CSI300  ended 0.2% higher,
rising for a sixth straight session, while Hong Kong's Hang Seng
benchmark  .HSI  finished up 0.6%.
    China's five-year loan prime rate (LPR)  CNYLPR5Y=CFXS  was
lowered by 25 basis points to 3.95%, while the one-year LPR
 CNYLPR1Y=CFXS  was left unchanged at 3.45%.
        The cut "was the first cut in eight months, and the
largest since that rate was introduced in 2019", said Andy
Maynard, head of equities at China Renaissance in Hong Kong.
  
        It's "very positive for the market", he said.
  
        The rate cut, which influences the pricing of mortgages,
sends a strong signal that policymakers are serious about
providing more support to the property market, said David Chao,
global market strategist for Asia Pacific ex-Japan at Invesco
Asset Management.
  
        Shares in real estate developers  .CSI000006  rose 1%,
and securities brokers  .CSI399707  added 1.3%.
  
        In Hong Kong, tech giants  .HSTECH  added 0.4%, after
rising 6.9% in the previous week, and mainland property
developers  .HSMPI  climbed 0.8%.
  
        Also helping sentiment, China's securities watchdog said
it held a series of seminars with market participants who
proposed tighter scrutiny of company listings and trading
behaviour.
    The meetings were led by the watchdog's newly installed
chairman Wu Qing and held immediately after the week-long Lunar
New Year holiday.
    Still, investors doubt a recent rally in stock market can
last, even after efforts by authorities to shore up confidence,
and analysts say more strong measures are needed.
    "I don't think this will be sufficient, I think you need to
have a good macro policy mix of both fiscal and monetary
policy," said Saktiandi Supaat, regional head of FX research and
strategy at Maybank.
    "So the fiscal stimulus element is still missing to play a
role to enhance sentiment."
   

 (Reporting by Shanghai Newsroom, Editing by Sam Holmes and Ed
Osmond)
 ((Jason.Xue@thomsonreuters.com))