China stocks defy slump in Asian markets amid policy easing bets while Hang Seng surrenders gain
- China’s economy lost further momentum last quarter, fuelling hopes for more policy support and rate cuts to stabilise growth
- Several Macau casino operators surrendered some of their two-day gains from last week’s regulatory boost
The Shanghai Composite Index added 0.8 per cent to 3,569.91 at the close in addition to a 0.6 per cent gain on Monday, the first back-to-back gain this year. China Shenhua Energy and PetroChina jumped 3.3 per cent, pacing a rally in an index tracking energy producers and coal miners.
China’s central bank on Monday lowered the rate on medium-term lending facility (MLF), a tool to finance commercial lenders, anchoring expectations for more stimulus to shore up growth. The focus will be on loan prime rates, a key market-based lending rate set on the 20th of every month that was trimmed in December for the first time since April 2020.
“The cut [in the MLF rate] clearly sends a signal of easing, which is helpful to lower corporate funding costs and reverse the pessimistic expectations,” said Shen Chao, a strategist at HSBC Jintrust Fund Management in Shanghai. “For the stock market, the cut in the interest rate could reverse the current downtrend.”
Property stocks bucked the trend, climbing 0.8 per cent on average, the only winning industry subgroup within the Hang Seng Index. Cheaper credit will aid a recovery in China’s home sales. Country Garden and Longfor Group gained at least 2 per cent.
The rate cuts appear to extend a policy easing campaign started in December, according to Fidelity International, and more easing could follow. They have been reinforced by other regulatory measures, including a quicker-than-expected decision on gaming licenses for casino operators in Macau, the firm said.