PBOC Considers RRR Cut Ahead of US Fed Cuts
4 Min. Read Time
Key News
Asian equities were mixed overnight on little news as Mainland China, Taiwan, and Singapore outperformed, Japan underperformed, and Hong Kong was slightly lower in advance of a typhoon coming tomorrow, which could affect market hours.
The Hong Kong Stock Exchange is reportedly considering expediting Alibaba’s inclusion in Southbound Stock Connect after the company changed its Hong Kong listing to a dual primary with New York. The Exchange will be reviewing its fast entry rules over the next few days.
The electric vehicle ecosystem was mixed overnight as NIO guided third quarter deliveries to be higher than consensus estimates.
Mainland financial media reported that the People’s Bank of China (PBOC), China’s central bank, will consider another cut to the reserve requirement ratio (RRR). The cut would come right before or just after confirmation of a US Fed interest rate cut this month. Cuts have slowed recently as the central bank seeks to bolster China’s currency versus the US dollar in the absence of US Fed rate cuts, though they now seem more likely. All eyes in Asia will likely be on the US jobs report tomorrow.
Rate cut hopes lifted real estate stocks in Hong Kong overnight. Meanwhile, internet stocks were mostly flat overnight on little news.
China's currency, the Renminbi (CNY) has appreciated significantly against the US dollar in only two months. It has gone from 7.27 per USD at the end of June to only 7.09 per USD today.
Mainland media reported that solar panel manufacturers have met to agree on lowering supply to stabilize prices. The cuts to production could be up to 30%. Perhaps this is to avoid claims of “dumping” from importing nations. China’s solar companies have done an excellent job of keeping solar prices low, aiding the energy transition.
The Hang Seng and Hang Seng Tech indexes diverged to close -0.07% and +0.14%, respectively, on volume that decreased -12% from yesterday. Mainland investors sold a net -$203 million worth of Hong Kong-listed stocks and ETFs via Southbound Stock Connect. The top-performing sectors overnight were Real Estate and Health Care. Meanwhile, the worst-performing sectors were Energy and Industrials.
Shanghai, Shenzhen, and the STAR Board closed +0.14%, +0.52%, and -0.15%, respectively, on volume that decreased -4% from yesterday. The top-performing sectors overnight were Real Estate and Communication Services. Meanwhile, the worst-performing sectors were Energy and Utilities.
Last Night’s Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.1% |
| Hang Seng Tech | HSTECH Index | 0.1% |
| Hong Kong Turnover | HKTurn Index | -12.4% |
| HK Short Sale Turnover | HKSST Index | -5.7% |
| Short Turnover as a % of HK Turnovr | N/A | 13.7% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -203.6 |
| China (Shanghai) | SHCOMP Index | 0.1% |
| China (Shenzhen) | SZCOMP Index | 0.5% |
| China (STAR Board) | Star50 Index | -0.2% |
| Mainland Turnover | .chturn Index | -4.3% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -0.7% |
| Japan | NKY Index | -1.1% |
| India | SENSEX Index | -0.2% |
| Indonesia | JCI Index | 0.1% |
| Malaysia | FBMKLCI Index | -0.3% |
| Pakistan | KSE100 Index | 0.1% |
| Philippines | PCOMP Index | 0.4% |
| South Korea | KOSPI Index | -0.2% |
| Taiwan | TWSE Index | 0.5% |
| Thailand | SET Index | 2.8% |
| Singapore | STI Index | 0.5% |
| Australia | AS51 Index | 0.4% |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 154 | -0.08 |
| Communication Services | 9 | 0.26 |
| Consumer Discretionary | 29 | 0.02 |
| Consumer Staples | 13 | 0.35 |
| Energy | 7 | -2.91 |
| Financials | 24 | -0.25 |
| Health Care | 14 | 0.66 |
| Industrials | 18 | -0.95 |
| Information Technology | 11 | -0.3 |
| Materials | 11 | 0.19 |
| Real Estate | 6 | 1.25 |
| Utilities | 12 | -0.25 |
| China Listed | 487 | 0.51 |
| Communication Services | 13 | 1.25 |
| Consumer Discretionary | 41 | 0.87 |
| Consumer Staples | 32 | 0.83 |
| Energy | 17 | -1.17 |
| Financials | 68 | 0.72 |
| Health Care | 45 | 1.1 |
| Industrials | 74 | 0.46 |
| Information Technology | 93 | 0.28 |
| Materials | 80 | 0.11 |
| Real Estate | 7 | 2.15 |
| Utilities | 17 | 0.11 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.2 |
| Alibaba HK | 9988 HK Equity | -0.4 |
| JD.com HK | 9618 HK Equity | -1.4 |
| NetEase HK | 9999 HK Equity | 0.6 |
| Yum China HK | 9987 HK Equity | 0.5 |
| Baozun HK | 9991 HK Equity | -6.6 |
| Baidu HK | 9888 HK Equity | -1.1 |
| Autohome HK | 2518 HK Equity | 5.8 |
| Bilibili HK | 9626 HK Equity | 3.5 |
| Trip.com HK | 9961 HK Equity | 0 |
| EDU HK | 9901 HK Equity | 2.7 |
| Xpeng HK | 9868 HK Equity | 1.5 |
| Weibo HK | 9898 HK Equity | -0.3 |
| Li Auto HK | 2015 HK Equity | -1.3 |
| Nio Auto HK | 9866 HK Equity | 1.2 |
| Zhihu HK | 2390 HK Equity | 1.5 |
| KE HK | 2423 HK Equity | 1.3 |
| Tencent Music Entertainment HK | 1698 HK Equity | 1.8 |
| Meituan HK | 3690 HK Equity | 0.1 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | 0.2 |
| MEITUAN-CLASS B | 0.1 |
| ALIBABA GROUP HOLDING LTD | -0.4 |
| CNOOC LTD | -0.3 |
| CHINA CONSTRUCTION BANK-H | -0.9 |
| XIAOMI CORP-CLASS B | -0.6 |
| IND & COMM BK OF CHINA-H | -0.9 |
| PETROCHINA CO LTD-H | -2.9 |
| CHINA PETROLEUM & CHEMICAL-H | -6.1 |
| CHINA MOBILE LTD | -0.8 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| CAMBRICON TECHNOLOGIES-A | -13.5 |
| MIDEA GROUP CO LTD-A | -2.9 |
| SERES GROUP CO L-A | 3 |
| BYD CO LTD -A | 1 |
| CONTEMPORARY AMPEREX TECHN-A | -0.2 |
| IND & COMM BK OF CHINA-A | -1.4 |
| KWEICHOW MOUTAI CO LTD-A | 0.3 |
| PING AN INSURANCE GROUP CO-A | 1.8 |
| EOPTOLINK TECHNOLOGY INC L-A | 2.3 |
| ZHONGJI INNOLIGHT CO LTD-A | -0.2 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.09 versus 7.11 yesterday
- CNY per EUR 7.86 versus 7.88 yesterday
- Yield on 1-Day Government Bond 1.33% versus 1.32% yesterday
- Yield on 10-Year Government Bond 2.13% versus 2.13% yesterday
- Yield on 10-Year China Development Bank Bond 2.23% versus 2.22% yesterday
- Copper Price -0.06%
- Steel Price -0.61%
