Written by Cláudio Afonso | LinkedIn | X
Hong Kong-listed Chinese automakers surged on Tuesday after the People’s Bank of China (PBOC) announced several better than expected key measures to stimulate the economy and support liquidity.
The financial stimulus of at least 800 billion yuan ($113.7 billion) is the strongest one since the Covid-19 pandemic four years ago.
Shortly before the closing bell, the Hang Seng Index is jumping 4.07 percent with Nio leading the gains among automotive startups (up 10.2 per cent) followed by the new energy vehicle (NEV) manufacturer Li Auto posting gains of 9.2 percent.
Shares of XPeng are rising 5.6 percent while the Stellantis-backed Leapmotor and China’s giant Geely register gains of more than 4 percent.
Pan Gongsheng, governor of the People’s Bank of China (PBOC), said the central bank will set up a swap facility for securities, fund, and insurance firms allowing eligible institutions to access liquidity from the central bank by pledging assets.
Pan said the policy is expected to significantly improve these institutions’ ability to raise funds and increase their shareholdings.
The central bank announced a 50-basis-point cut to the reserve requirement ratio (RRR), allowing banks to hold less cash in reserve and freeing up funds for lending and investment.
The Governor also signaled the possibility of further RRR cuts, potentially ranging from 25 to 50 basis points before the end of the year, depending on economic conditions.
In addition, the PBOC revealed a 20-basis-point reduction in the 7-day reverse repurchase (repo) rate, a stronger-than-expected move aimed at boosting liquidity in the financial system.
Written by Cláudio Afonso | LinkedIn | X
