CHINA 50 – Daily Chart
The price of the China 50 index has some support in play after the recent pullback. The 13,000 level is key for the index this week and could reignite the rally.
The PBoC’s latest interest rate decision will be announced on Wednesday at 9:15am HKT.
The Chinese government is still seeking to stimulate the economy and regulators reportedly asked the country’s banks to lower rates they pay to deposits from other financial institutions. The country’s interest rate mechanism, a supervisory body overseen by the central bank, said banks should lower the interbank deposit rate against the 7-day reverse repo rate, currently set at 1.5% annually.
In a Reuters survey of 28 participants, all respondents expected rates on the one-year and five-year LPRs to remain at the same level.
“LPRs were lowered so sharply in October, so it is unlikely to have another cut this month,” a Chinese bank trader told Reuters.
Investors will look for the government’s response to the threat of tariffs from the incoming Trump government.
“Aside from the tariff threat, the recent upward repricing of US rates is surely causing some headaches in Beijing, as it limits space for monetary easing in China at a time when the economy is trying to get back on its feet,” said Roman Ziruk, senior analyst at Ebury.
The index of the top 50 Chinese shares has support around the 13,000 level and that will be key to keeping the rally alive into year-end.