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Buildings in Pudong’s Lujiazui Financial District in Shanghai, China, on Monday, Jan. 29, 2024.
Bloomberg | Bloomberg | Getty Images
Hong Kong’s Hang Seng index surged over 3% on Tuesday, led by consumer non-cyclical stocks and leading gains in Asia as Beijing announced a slew of policy easing measures in a rare briefing from central bank governor Pan Gongsheng.
The mainland Chinese CSI 300 was up 2.4% after the decision, also powered by consumer non-cyclicals.
The PBOC will cut the reserve requirement ratio for banks by 50 basis points, although it did not provide a specific timeline. It also announced it would cut the seven-day reverse repurchase rate from 1.7% to 1.5%.
Pan also said that authorities could cut the loan prime rate by 0.2 to 0.25 percentage points, without specifying whether he was referring to the one-year or five-year. The one-year LPR currently stands at 3.35% and five-year LPR is at 3.85%.
Other measures also include reducing down payments for second homes, as well as 1 trillion yuan ($141.78 billion) of long-term funds.
Winnie Wu, China strategist at Bank of America, described the move on CNBC’s “Street Signs Asia” as “a big bang to boost investor confidence in market.”
For the short term, they have a positive view on sectors like banking and insurance, but Wu added that domestic consumption recovery will take longer to recover. She said more is needed from fiscal policy and structural reform to make a market rally sustainable.
Australia’s central bank held its benchmark policy rate at 4.35%, in line with expectations from economists polled by Reuters.
The Commonwealth Bank of Australia said in a note last week that the economic data flow since the last meeting “has either been softer or in line with the RBA’s expectations.” As such, CBA expects a slightly less hawkish statement, but does not see a material shift in language or tone.
Australia’s S&P/ASX 200 fell 0.19% after the decision.
Japan’s Nikkei 225 was 0.71% higher, while the Topix gained 0.66% as Japanese markets returned from a holiday. This marks the first time that the Nikkei has crossed the 38,000 mark since Sept. 3.
South Korea’s Kospi was up 0.5%, while the small-cap Kosdaq rose 1.31%.
Overnight in the U.S., the Nasdaq Composite ticked up 0.14%, also mirroring gains made by the other two major U.S. indexes.
The S&P 500 and Dow Jones Industrial Average touched new closing highs in Monday’s trading session.
The broad market index added 0.28% to end at 5,718.57, while the Dow Jones Industrial Average gained 61.29 points, or 0.15%, to close at 42,124.65.
—CNBC’s Brian Evans and Alex Harring contributed to this report.
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