December 30, 2019 / 4:40 AM / 2 months ago

China, Hong Kong stocks rise on hopes of lower financing costs

* SSEC +0.9%, CSI300 +1.2%, HSI +0.6%

* HK->Shanghai Connect daily quota used 2.6%, Shanghai->HK daily quota used 1.2%

* FTSE China A50 +1.1%

SHANGHAI, Dec 30 (Reuters) - China and Hong Kong stocks rose on Monday on expectation Beijing’s decision to switch the benchmark for floating-rate loans could lower financing costs, while a solid forecast for retail sales in 2019 also supported investor sentiment.

** The CSI300 index rose 1.2%, to 4,071.95, by the end of the morning session, while the Shanghai Composite Index gained 0.9%, to 3,033.33.

** The Hang Seng index added 0.6%, to 28,403.75, while the Hong Kong China Enterprises Index gained 0.6%, to 11,264.43.

** China’s central bank will use the loan prime rate (LPR) as a new benchmark for pricing existing floating-rate loans, in a step that analysts say could help lower borrowing costs and underpin economic growth.

** “The purpose of the step is to make interest rates more market-driven and help lower financing costs,” said Wen Bin, an economist at Minsheng Bank in Beijing.

** Overall it’s a favourable news for the equities market, though the impact on bond market could be quite limited, Huatai Securities said in a report.

** China’s retail sales are expected to increase 8% in 2019 to 41.1 trillion yuan ($5.89 trillion), the official Xinhua News Agency reported on Monday.

** Consumer and securities firms led the gains on the mainland, while banks retreated as their profitability is likely to be hit by the LPR move.

** The Commerce Ministry has “proactively dealt with” trade frictions with the United States this year, it said on Sunday after an annual work conference.

** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.22%, while Japan’s Nikkei index was down 0.69%.

** The yuan was quoted at 6.982 per U.S. dollar, 0.19% firmer than the previous close of 6.9956.

** As of 0410 GMT, China’s A-shares were trading at a premium of 25.72% over the Hong Kong-listed H-shares. ($1 = 6.9818 Chinese yuan) (Reporting by Luoyan Liu and Brenda Goh; Editing by Subhranshu Sahu)

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