August 20, 2019 / 4:48 AM / a month ago

China, Hong Kong stocks flat after new lending reference rate

* SSEC 0.1%, CSI300 0.0%, HSI 0.0%

* HK->Shanghai Connect daily quota used -0.8%, Shanghai->HK daily quota used 3.3%

* FTSE China A50 +0.1%

SHANGHAI, Aug 20(Reuters) - China and Hong Kong stocks barely moved on Tuesday as investors took a breather and pondered the extent and impact of Beijing’s interest rate reform.

** The CSI300 index was unchanged at 3,790.92 at the end of the morning session, while the Shanghai Composite Index gained 0.1% to 2,885.17.

** The Hang Seng index was unchanged at 26,294.08, while the Hong Kong China Enterprises Index gained 0.5% to 10,160.12.

** China’s new lending reference rate was set slightly lower on Tuesday in the first publication of the benchmark since the central bank announced interest rate reforms designed to lower corporate borrowing costs.

** The People’s Bank of China (PBOC) on Saturday said the Loan Prime Rate (LPR) would become the lending benchmark for banks when setting rates for new loans to households and businesses, instead of the central bank’s existing benchmark one-year lending rate.

** Analysts and investors say the reforms are an official attempt to lower financing costs in the world’s second largest economy, which has faced continued pressure from weakening demand at home and an extended trade war with the United States.

** “Overall, it is a modest cut in line with our expectations, though in the future, it’s expected the LPR could go further lower, as China has its own target of steering funding costs lower,” said Shen Xinfeng, analyst with Northeast Securities.

** “The addition of the eight small banks, whose strength might not be the same as another 10 big lenders in terms of funding costs, could have certain impact in the formation of the new LPR,” she said.

** Eyes were also on Chinese tech giant Huawei caught in the crossfire of a protracted Sino-U.S. trade war.

** The United States will extend a reprieve that permits China’s Huawei Technologies to buy components from U.S. companies to supply existing customers, the Commerce Department said on Monday, but it also moved to add more than 40 of Huawei’s units to its economic blacklist.

** The tech heavy start-up board index in Shenzhen slipped 0.3% following the Huawei news.

** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.42% while Japan’s Nikkei index was up 0.48%.

** The yuan was quoted at 7.0675 per U.S. dollar, 0.24% weaker than the previous close of 7.0509.

** The largest percentage gainers in the main Shanghai Composite index were Gansu Dunhuang Seed Group Co Ltd , up 10.06%, followed by Veken Technology Co Ltd , gaining 10.04% and North China Pharmaceutical Co Ltd, up by 10%.

** The largest percentage losers in the Shanghai index were Shandong Pharmaceutical Glass Co Ltd, down 9.98%, followed by Qingdao Tianhua Institute of Chemistry Engineering Co Ltd, losing 5.96% and Asia Cuanon Technology Shanghai Co Ltd, down by 5.62%.

** The top gainers among H-shares were CSPC Pharmaceutical Group Ltd, up 10.8%, followed by ANTA Sports Products Ltd, gaining 4.79% and Sinopharm Group Co Ltd , up by 3.31%.

** The three biggest H-shares percentage decliners were Dongfeng Motor Group Co Ltd, which has fallen 1.30%, Country Garden Holdings Co Ltd, which has lost 1.3% and Longfor Group Holdings Ltd, down by 1.2%.

** As of 04:15 GMT, China’s A-shares were trading at a premium of 30.10% over the Hong Kong-listed H-shares.

Reporting by Luoyan Liu and John Ruwitch

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