Ratio cut spurs shares to close up
Print Edition
SHANGHAI stocks gained the most in one month yesterday after the central bank cut reserve requirement ratio for targeted banks in a fresh bid to bolster economic growth.
The Shanghai Composite Index rose 1.08 percent, the biggest gain since May 12, to 2,052.53 points.
The People’s Bank of China said on Monday that the reserve requirement ratio will be cut 0.5 percentage points for two-thirds of city commercial banks, 80 percent of rural commercial banks above county level and 90 percent of rural cooperative banks above county level. The cuts will be effective from next Monday.
It is the second cut in two months after the PBOC reduced the ratio by 2 percentage points for county-level rural commercial banks and rural cooperatives in April.
Zhu Haibin, chief China economist of JPMorgan, said the two rounds of cuts will release about 194 billion yuan (US$31 billion) into the banking system.
“The impact of such measures on liquidity will be rather moderate,” Zhu said in a note yesterday.
Everbright Securities said the move strengthens hopes the government will take further action to boost growth if economy continues to slow.
The Industrial and Commercial Bank of China, the country’s biggest lender, gained 1.9 percent to 3.73 yuan. Shanghai Pudong Development Bank rose 0.9 percent to 9.63 yuan. The Industrial Bank added 1.5 percent to 9.94 yuan.
Brokerages rose after the China Securities Regulatory Commission said in a Weibo posting late on Monday that it had approved 10 initial public offerings, marking the official restart of IPOs.
CITIC Securities, China’s biggest listed brokerage, rose 2.9 percent to 11.50 yuan. Sinolink Securities jumped 5.5 percent to finish at 20.38 yuan.
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