China Stocks Close up as Investors Embrace Monetary Policy
Tang Shihua
DATE:  Nov 18 2019
/ SOURCE:  yicai

(Yicai Global) Nov. 18 -- China's major mainland stock indexes showed signs of life today after China's central bank reiterated its monetary policy stance over the weekend and cut its open market operation interest rate for the first time in more than four years.

 The Shanghai Composite Index increased 0.62 percent to 2,909.20 at close. The Shenzhen Component Index ended up by 0.70 percent at 9,715.27. The ChiNext Price Index, which tracks Shenzhen-listed growth stocks, was 0.46 percent stronger at 1,682.49.

The PBOC injected a net CNY180 billion cash (USD25.7 billion) into its monetary system via the 7-day reverse repurchase. The interest rate was set at 2.50 percent, 5 basis point lower than its previous such operation.

The central bank had already cut the interest rate on one-year MLF facilities earlier this month by 5 basis points to 3.25 percent. This benefits regional banks that lend to small or medium-sized firms.

The PBOC is determined to maintain a prudent monetary policy stance, but this can be slightly adjusted based on changes in economic growth and price levels to prevent "a divergence of inflation expectations," it said in the quarterly report it issued on Nov. 16.

The policy must be stable, and China will continue as one of the few major economies hewing to a "normal" monetary policy, the report added.

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Keywords:   Stock Market,Shanghai Composite Index,Shenzhen Component Index,ChiNext Price Index