Hong Kong Market slips on caution ahead of earnings

The Hong Kong stock market finished session with small losses on Monday, 20 April 2020, as investors elected to book recent profit amid expectations of disappointing corporate earnings reports. However, market losses capped as a key Chinese lending rate was cut for the second time this year to shore up the coronavirus-hit economy. At closing bell, the benchmark Hang Seng Index declined 0.21%, or 49.98 points, to 24,330.02. The Hang Seng China Enterprises Index rose 0.09%, or 9.22 points, to 9,824.42.

Market sentiments were downbeat on caution ahead of the start of Hong Kong companies results for the first quarter, with most of them expected to record relatively big losses.

The People's Bank of China cut its benchmark lending rate as expected to reduce borrowing costs for companies and prop up the economy, after it contracted for the first time in decades. The one-year loan prime rate (LPR) was lowered by 20 basis points (bps) to 3.85% from 4.05% previously, while the five-year LPR was cut by 10 bps to 4.65% from 4.75%. Most new and outstanding loans are based on the LPR, while the five-year rate influences the pricing of mortgages. The LPR is a lending reference rate set monthly by 18 banks. The move was the second cut to the lending benchmark rate this year, and the latest reduction in one of China's key lending rates.

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