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Sampson Financial 2nd March - PBOC cuts Rates For The Second Time at the Weekend
This weekend the Peoples Bank of China cut rates for the second time since November.
The move which saw both the benchmark 1yr lending rate and the deposit rate both cut by 0.25% is seen as another sign that the Chinese economy will not be expanding as much as analysts first thought and a sign of the continued battle against deflation.
The last rate cut was back in November and that saw a 26% surge in mainland China stocks. This rate cut did not have the same effect as many believe it is just the beginning of further stimulus to be implemented this year.
It looks like a growth of just 7% for the first 3 months of 2015 will be achieved as opposed to the 7.3% forecasted. Consumer prices dropped for the same period and inflation was set at just 1.2% year on year for the first quarter of 2015, significantly lower than the 2% seen in 2014 and the government's target of 3.5%.
Late last week the official Purchasers Manager Index was released. This came in slightly higher than expected at 49.7 forecast, at 49.9 it is showing contraction however a private PMI suggested a 50.7 for February. Any score above 50 is seen as expansion.
Towards the end of the trading day the Hang Seng was up just 0.15% however the Shanghai Composite was up nearly 1% on the news.
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DISCLAIMER The views, opinions, findings, and conclusions or recommendations expressed on this service are those of the author(s) and do not necessarily reflect the views of the Sampson Financial Management. All market data within this release is for your general information and enjoys indicative status only. Sampson Financial Management does not accept any responsibility for its accuracy or for any use to which it may be put. All share prices and market indexes delayed at least 15 minutes. 52 week high and low values are calculated from close price data.
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