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Lower Than Expected LPR Cut Weighs On China Shares

EQUITIES

Regional equity trends are mixed, with HK and China markets mostly under pressure, while trends elsewhere are somewhat more encouraging, albeit in selective markets. US equity futures have been range bound, Eminis drifting sideways and last near 4384, slightly firmer for the session (Friday's low came in at 4350). Nasdaq futures are also up a touch, last near 14763. Both indices ticked down after China held the 5-yr LPR steady.

  • The 1yr LPR was cut, but by 10bps, more was expected, with the consensus looking for a -15bps cut. The bigger surprise though was the 5yr LPR held steady at 4.20%, against a -15bps cut expectation.
  • These moves have weighed on China equities, with the CSI 300 down 0.52% at the break and comfortably sub the 3800 level. The real estate sub index is down 1.17% at this stage. In HK the HSI is down 1.38% at the break.
  • Japan stocks have fared better the Topix last up 0.50%, the Nikkei 225 +0.75%. Sentiment has recovered from the earlier dip post the China LPR announcements. Toyota gains have aided broader sentiment, along with gains in information and communication.
  • The Kospi is doing better, after faltering late last week. The index is up +0.60%, away from the 2500 level. The Taiex is close to flat at this stage. In SEA, trends are mixed, with major markets not too far from flat at this stage.

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