China Market rebounds on policy support speculation

The Mainland China share market finished session higher on Thursday, 16 December 2021, on mounting speculation that central banks will further loosen policies and cut a key borrowing cost amid a liquidity crunch and sliding home sales.

At close of trade, the benchmark Shanghai Composite Index advanced 0.75%, or 27.39 points, to 3,675.02. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 0.62%, or 15.82 points, to 2,559.31. The blue-chip CSI300 index was up 0.58%, or 28.83 points, to 5,034.73.

Market participants expects that the central bank to implement more easing measures to help arrest the economic slowdown after China's central bank partially rolled over maturing medium-term loans on Wednesday as it sought to boost liquidity. The People's Bank of China (PBOC) kept the rate on 500 billion yuan ($78.5 billion) worth of one-year medium-term lending facility (MLF) loans steady for the 20th straight month in December at 2.95%.An earlier decision by the PBOC to lower banks' reserve requirement ratio (RRR) also came into effect on Wednesday, freeing up 1.2 trillion yuan worth of long-term funds. That also helped offset some of the 950 billion yuan worth of MLF loans due to mature on Wednesday.

Many market experts are expecting a chance of the central bank marginally reducing the lending benchmark Loan Prime Rate (LPR) due next Monday in a bid to counter the economic slowdown.

CURRENCY NEWS: China's yuan was up against the U.S. dollar on Thursday after firmer mid-point fixing by the central bank, on sustained year-end corporate demand. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.3637 per dollar, 79 pips, or 0.12%, firmer than the previous fix of 6.3716. In the spot market, the onshore yuan CNY=CFXS was changing hands at 6.3672 at midday, 8 pips firmer than the previous late session close.

Powered by Capital Market - Live News