Hong Kong Market slips 0.2%

Headline indices of the Hong Kong stock market finished session down on Friday, 03 April 2020, as investors renewed their concerns over the coronavirus crisis in view of spikes in the number of people infected with virus in Japan, the United States and other parts of the world. However, market losses capped after China's central bank announced to cut reserve requirement ratio (RRR) by one percentage point for some banks, which is expected to release 400 billion yuan to the market. At closing bell, the benchmark Hang Seng Index declined 0.19%, or 43.95 points, to 23,236.11. The Hang Seng China Enterprises Index fell 0.37%, or 35.46 points, to 9,491.10.

Hong Kong Stocks spurted in the early morning, with sentiment brightened by the Wall Street rebound and New York crude oil futures' rally on the back of growing hopes for an oil output curb agreement between Saudi Arabia and Russia. The Hong Kong market soon lost steam, as investors renewed their concerns over the coronavirus crisis in view of spikes in the number of people infected with virus in Japan, the United States and other parts of the world.

However, market losses capped after China's central bank announced to cut reserve requirement ratio (RRR) by one percentage point for some banks, which is expected to release 400 billion yuan to the market.

China's central bank, the People's Bank of China (PBOC), announced it will cut the targeted RRR by 0.5 percentage points on 15 April and again on 15 May, amounting to a full 1 percentage point cut. This time, the RRR cut is only targeting smaller banks, which is expected to release 400 billion yuan (56.4 billion U.S. dollars) to the market. This came after two RRR cuts were implemented this year, which freed up 1.35 trillion yuan of long-term funds cumulatively, in an effort to support the development of the real economy, promote greater support for small, medium and micro enterprises, and reduce the actual cost of social financing, especially amid the ongoing coronavirus pandemic. Additionally, the PBOC has decided to reduce the excess deposit reserve interest rate of financial institutions in the central bank from 0.72 percent to 0.35 percent since April 7. On January 6, the central bank lowered the deposit reserve ratio of some financial institutions by 0.5 percentage points, releasing more than 800 billion yuan of long-term funds. On March 16th, the PBOC announced RRR cuts by 0.5 to one percentage points for qualified banks. Qualified joint-stock commercial banks will be eligible for an additional one percentage point RRR cut. The move was aimed at financial institutions' services for small businesses, farmers, low-income households, people with disabilities and senior citizens, freeing up 550 billion yuan.

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