Bloomberg Daybreak: Asia Edition
Chinese Banks Cut Key Reference Rate
Feb 20, 2024
Mark Cranfield, Eric Zhu, and Thu Ha Chow discuss China's loan prime rate changes and their impact on APAC markets. They delve into the influence of rate policy on the Chinese market, the implications for the housing industry, and potential growth engines like electric vehicles. The conversation also covers liquidity concerns, challenges in restructuring, and the potential for the Japanese market to receive more attention as a diversification trade.
24:50
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Quick takeaways
- China's rate cuts may not be sufficient, additional measures like property market fixes essential for market recovery.
- Investors able to separate China from Asian equity outlook, highlighting China's challenges and the region's diverse opportunities.
Deep dives
China's rate cuts disappoint investors
Investors in China are disappointed with the recent rate cuts by the banks as they were hoping for more significant reductions. The five-year loan rate was cut more than expected, but there was no change in the one-year rate. Short-term interest rates have not been lowered either, which is a cause for concern for equity and bond markets. While rate cuts alone may not be enough to invigorate the Chinese market, a coordinated approach involving other measures such as property market fixes and lending support is needed.
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