China Stocks gain on GDP data, policy rates cut

The Mainland China share market finished session higher on Monday, 17 January 2022, as economic data showed the world's second largest economy grew faster than expected between October and December.

Meanwhile, market sentiments underpinned further by the People's Bank of China (PBOC) announcement today to cut the borrowing costs of its medium-term loans for the first time since April 2020 to cushion any economic slowdown.

At close of trade, the benchmark Shanghai Composite Index added 0.58%, or 20.41 points, to 3,541.67. The Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 1.54%, or 37.62 points, to 2,473.01. The blue-chip CSI300 index increased 0.86%, or 40.55 points, to 4,767.28.

 

ECONOMIC NEWS: China GDP Grows 8.1% in 2021 - China's economy grew 8.1% for full year 2021 from a year earlier, exceeding the government's target of "above 6%" and following a revised 2.2% growth in 2020, according to official data from China's National Bureau of Statistics released on Monday. The economy expanded 4% year-on-year in the fourth quarter of 2021, easing from a 4.9% growth in the previous period. It was the slowest pace of expansion since the second quarter last year, amid several headwinds including a property downturn and COVID-19 outbreaks. On seasonally adjusted basis, the economy expanded 1.6% on quarter in the three months to December 2021, following an upwardly revised 0.7% advance in the previous quarter. This was the fastest quarterly growth since the fourth quarter of 2020, supported by a rebound in activity ahead of the Beijing Winter Games as well as the Lunar New Year and despite strict COVID-19 curbs in some regions and uncertainty from the property sector.

China Cuts Rates On Policy Loans For First Time Since 2020- China's central bank, on Monday cut the borrowing costs of its medium-term loans for the first time since April 2020 to cushion any economic slowdown. The People's Bank of China (PBOC) said it was lowering the interest rate on CNY 700 billion (USD 110.19 billion) of one-year medium-term lending facility (MLF) loans to some financial institutions by 10 basis points to 2.85% from 2.95% in previous operations. With CNY 500 billion of MLF loans maturing on Monday, the operation resulted a net CNY 200 billion of fresh fund injections into the banking system. The central bank also lowered the borrowing costs of seven-day reverse repurchase agreements, or repos, by the same margin to 2.1a% from 2.2%, when it offered another CNY 100 billion of reverse repos into the banking system on the day, compared with CNY 10 billion of such short-term liquidity tool due on Monday.

CURRENCY NEWS: China's yuan was up against the U.S. dollar on Monday, after stronger mid-point fixing by the central bank. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.3599 per dollar, 78 pips stronger than the previous fix of 6.3677. In the spot market, the onshore yuan CNY=CFXS was changing hands at 6.3480 per dollar, 51 pips firmer than the previous late session close.

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