The Hang Seng index rallies going into the close as China announces RRR cut

<p>Hong Kong's main stock index is now up over 3% on the day and rallying into the closing stages, after the Chinese central bank announced the first RRR cut of the year <a href="" target="_blank" rel="follow">here</a>. It is a bigger one this time around as well as the reduction is 50 bps, as opposed to the two 25 bps cuts performed in March and September last year.</p><p>Risk assets in general are feeling more buoyant now as we look towards European trading, with S&amp;P 500 futures also rising by 0.4% on the day. In turn, the dollar is losing some ground with USD/JPY now down 0.4% to 147.70 and EUR/USD up 0.2% to 1.0875 currently.</p><p>Going back to Chinese equities, is this the start of a major turnaround? Or is it merely a dead cat bounce? That's a really tough question for investors to make sense of at the moment. I mean, this 50 bps RRR cut isn't quite the supposed $278 billion rescue package touted <a href="" target="_blank" rel="follow">here</a> yesterday.</p>

This article was written by Justin Low at

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