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Stocks rise 0.27% on reserve ratio cut
By Hu Xiaocen |
February 20, 2012, Monday
|
Online Edition
Online Edition
SHANGHAI stocks rose after the Chinese central bank announced cuts to the Reserve Requirement Ratio for commercial banks.
The Shanghai Composite Index added 0.27 percent, or 6.42 points to 2,363.6 at the trading close. Turnover stood at 82.3 billion yuan (US$13 billion).
The People's Bank of China announced on Saturday that a cut in the RRR by 0.5 percent points would be effective on February 24, the first cut in 2012. The RRR for large commercial banks will stand at 20.5 percent by then.
The central bank cut the RRR in December after tight monetary polices had resulted in 12 upward adjustments since January in 2010.
"PBOC's cut signals that the reserve ratio is entering a downward cycle," Lian Ping, the chief economist of the Bank of Communications, said on his microblog. "If the growth of foreign exchange capital obtained through yuan funds continues to slowdown in February along with diminishing new loans, the ratio will be cut again in March."
The index climbed 0.88 percent by the noon break, but closed lower at the trading close. Some analysts worried that the release of liquidity on the one hand would not give the stock market enough stimulation.
Huang Xuejun, senior analyst at Guosen Securities, said: "The reserve ratio cut is good news to the market with very limited power."
Li Xunlei, the chief economist at Haitong Securities agreed. "It does not have a direct impact on the capital market or property curbs," Li said.
"The cut will pump about 400 billion yuan into the system," said Aijian Securities. The broker recommended increasing holdings in blue chips.
Oil producers, property developers, and cement producers rallied on speculation that the improved liquidity would bolster economic growth, further extending the key index's five-week winning streak.
PetroChina Co, the nation's second largest refiner, soared 1.08 percent to 10.29 yuan. China Vanke Co, the biggest property developer, gained 0.51 percent to 7.83 yuan. Anhui Conch Cement Co, China's largest cement producer, jumped 0.94 percent to 17.21 yuan.
The Shanghai Composite Index added 0.27 percent, or 6.42 points to 2,363.6 at the trading close. Turnover stood at 82.3 billion yuan (US$13 billion).
The People's Bank of China announced on Saturday that a cut in the RRR by 0.5 percent points would be effective on February 24, the first cut in 2012. The RRR for large commercial banks will stand at 20.5 percent by then.
The central bank cut the RRR in December after tight monetary polices had resulted in 12 upward adjustments since January in 2010.
"PBOC's cut signals that the reserve ratio is entering a downward cycle," Lian Ping, the chief economist of the Bank of Communications, said on his microblog. "If the growth of foreign exchange capital obtained through yuan funds continues to slowdown in February along with diminishing new loans, the ratio will be cut again in March."
The index climbed 0.88 percent by the noon break, but closed lower at the trading close. Some analysts worried that the release of liquidity on the one hand would not give the stock market enough stimulation.
Huang Xuejun, senior analyst at Guosen Securities, said: "The reserve ratio cut is good news to the market with very limited power."
Li Xunlei, the chief economist at Haitong Securities agreed. "It does not have a direct impact on the capital market or property curbs," Li said.
"The cut will pump about 400 billion yuan into the system," said Aijian Securities. The broker recommended increasing holdings in blue chips.
Oil producers, property developers, and cement producers rallied on speculation that the improved liquidity would bolster economic growth, further extending the key index's five-week winning streak.
PetroChina Co, the nation's second largest refiner, soared 1.08 percent to 10.29 yuan. China Vanke Co, the biggest property developer, gained 0.51 percent to 7.83 yuan. Anhui Conch Cement Co, China's largest cement producer, jumped 0.94 percent to 17.21 yuan.
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