Hong Kong stocks rose for a second day after China’s central bank cut the amount of money commercial lenders must set aside as reserves in an effort to sustain a recovery from the pandemic.
The Hang Seng Index advanced 0.6 per cent to 27,496.17 in early Monday morning trading. The Hang Seng Tech Index, which last week saw a wipeout of more than US$600 billion in market cap from a February peak, was little changed.
China’s Shanghai Composite Index added 0.4 per cent.
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The cut in the reserve requirement ratio, which was announced after the market closed on Friday, will unleash about 1 trillion yuan (US$150 billion) into the financial system, according to the People’s Bank of China. Still, the central bank said the cut does not signal a shift in monetary policy, which has been tightened in the post-pandemic era.
The move came just days after Premier Li Keqiang mentioned the cut in the reserve ratio as a way to lower financing costs for smaller companies in a regular State Council meeting. China is due to release data on second-quarter economic growth on Thursday. Expansion probably slowed to 8 per cent from 18.3 per cent in the first quarter, according to the estimate of economists polled by Bloomberg.
The gains in local stocks came even as Beijing continued to increase its scrutiny of the technology sector. All Chinese companies with at least 1 million users must undergo a cybersecurity review before seeking to sell shares overseas, according to a draft released by the Cyberspace Administration of China over the weekend.
At the same time, the antitrust regulator announced it had blocked the merger of Huya and Douyu International Holdings, the two biggest video game live-streaming platforms, both backed by Tencent Holdings.
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This article originally appeared on the South China Morning Post (www.scmp.com), the leading news media reporting on China and Asia.
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