At close of trade, the benchmark Shanghai Composite Index dropped 1.07%, or 38.76 points, to 3,593.60. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 1.77%, or 44.73 points, to 2,478.42. The blue-chip CSI300 index declined 1.5%, or 74.34 points, to 4,880.42.
The People's Bank of China has cut one of the country's most important lending rates in a sign that the government is pushing ahead with policy easing measures to counter a loss of economic momentum. The central bank cut the one-year loan prime rate, which is widely used as a benchmark for the loans banks make to their customers, from 3.85% to 3.8%. The five-year loan prime rate remained unchanged from the prior month at 4.65%. Monday's rate cut was the first since April 2020, when the country was grappling with the initial outbreak of coronavirus.
The People's Bank of China this month cut the reserve requirement ratio, a rate for banks, in effect pumping close to $200 billion into the financial system.
In the third quarter, gross domestic product grew 4.9% year-on-year, its slowest pace in a year. Challenges across the country's real estate industry have intensified since then, with new home prices falling for several consecutive months and heavily-indebted developer Evergrande defaulting along with several of its peers.
CURRENCY NEWS: China's yuan was down against the U.S. dollar on Monday after softer mid-point fixing by the central bank and after lowering the lending benchmark rate to prop up slowing economic growth. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.3933 per dollar, 282 pips, or 0.44% weaker, than the previous fix of 6.3651. In the spot market, the onshore yuan CNY=CFXS was changing hands at 6.3785 per dollar at midday, 0.04% weaker from the previous late session close.
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