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Updated January 15th, 2024 at 08:50 IST

China stocks dip as central bank holds rates, injects liquidity

The CSI 300 index in China fell 0.5 per cent, while the Hang Seng benchmark lost 0.7 per cent in early trading.

Business Desk
Nikkei
China shares | Image:AP Photo
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China stocks dip: China's stock market declined on Monday after the People's Bank of China (PBOC) decided to maintain the interest rate, defying market expectations during the rollover of maturing medium-term policy loans.

Instead of adjusting the rate, the central bank opted for increased liquidity injections in the operation, injecting a net 216 billion yuan of fresh funds into the banking system while keeping the rate of medium-term lending facility (MLF) loans steady at 2.50 per cent.

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The CSI 300 index in China fell 0.5 per cent, while the Hang Seng benchmark lost 0.7 per cent in early trading. Market participants, in a recent Reuters poll, had anticipated a rate cut as a measure to support the weakening economy, with 54.3 per cent of the respondents expecting the central bank to reduce the MLF rate.

Leading the decline were real estate developers, experiencing a roughly 1.5 per cent drop, while new energy shares were down by 1 per cent. Hong Kong-listed tech giants also faced a decline of around 2 per cent.

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The central bank's decision not to adjust rates signals a cautious approach amid economic uncertainties, and the injection of liquidity aims to ensure ample funds within the banking system. Investors will be closely monitoring further developments in the market and any potential impact on sectors, particularly as the central bank grapples with balancing economic support and financial stability.

(With Reuters inputs)
 

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Published January 15th, 2024 at 08:50 IST

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