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Stocks up on news of huge fund injection
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SHANGHAI stocks rose yesterday amid media reports that China’s central bank provided significant liquidity to major banks to counter economic headwind.
The Shanghai Composite Index gained 0.49 percent to 2,307.89 points.
Reports went viral that the People’s Bank of China on Tuesday offered a total of 500 billion yuan (US$82 billion) of liquidity to the country’s five biggest banks through a three-month standing lending facility. The SLF was first introduced in 2013 as a supplement to other monetary policy tools.
Morgan Stanley said the liquidity injection was equivalent to a 50-basis-point cut in reverse requirement ratio with a three-month duration.
“With immediate policy actions taken, we think a growth rebound in both sequential and year on year terms will be likely, if funding costs were successfully reduced and infrastructure investment revived in the near future,” the US investment bank said.
Lenders were mixed, with the Industrial and Commercial Bank of China adding 0.3 percent to 3.56 yuan and the Bank of China off 0.7 percent to 2.70 yuan.
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