Chinese stocks complete second weekly loss after policy lending rate is left untouched

Name: How Covid shut down Shanghai
Uploaded: 2022-04-15T02:55:57.000Z
Duration: 5 min 59 s
Description: How Covid shut down Shanghai

Traders were disappointed after China left the one-year rate on the medium-term lending facility unchanged

Industrial and raw-material stocks were among the worst-performing industry groups, retreating at least 1.4 per cent

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A staff member disinfects a makeshift hospital at the Shanghai New International Expo Center. The lockdown in China’s biggest city is affecting stock market sentiment. Photo: Xinhua

Zhang Shidong

Published: 10:55am, 15 Apr 2022Updated: 3:36pm, 15 Apr 2022

Chinese stocks capped a second straight weekly loss as investors were disappointed after the central bank unexpectedly left a policy lending rate unchanged, tempering optimism about an immediate loosening of monetary policy signalled by the premier.

The Shanghai Composite Index eased 0.5 per cent to 3,211.24 at the close on Friday, posting a 1.3 per cent loss for the week. Hong Kong’s markets are closed through Monday for public holidays.

Industrial and raw-material stocks, which are more sensitive to the economic cycle, were among the worst-performing industry groups, retreating at least 1.4 per cent.

Traders were disappointed after the People’s Bank of China kept unchanged the one-year rate on the medium-term lending facility, a funding tool for commercial lenders. The central bank also refrained from injecting liquidity into the financial system through open-market operations.

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How Covid shut down Shanghai

That came even after speculation had mounted over further monetary policy loosening, with Premier Li Keqiang strongly hinting at a cut in the reserve requirement ratio (RRR) to stem a moderation in growth in a cabinet meeting this week.

“Given global inflation, chances of a massive loosening of monetary policies in the short term are low,” said Fei Xiaoping, an analyst at Dongguan Securities. “Even if there’s a cut in the RRR, it will be in the form of a targeted one.”