Markets in Shanghai as well as Hong Kong rose right after China announced taking action to bolster its slowing economy. SHCOMP, Shanghai Composite nearly advanced nearly 1.3% on the first trading day in 2020. As per the reports, the Hang Sang Index (HSI) of Hong Kong gained 1%. Meanwhile, KOSPI, South Korea’s Kospi fell 1.1% while the Japanese market remained closed for the New Year holidays. It has been notified that the Japanese market will reopen next Monday.
On Wednesday, the People’s Bank of China announced that it will reduce the total amount of cash banks that they have to keep in reserve once again. It is the first time that it has been cutting the reserve requirement ratio by 50 basis points for most of the financial institutions since September.
This move is one of the stimulus policies Beijing has been affecting the economy over the past few weeks. As per the Central Bank, The cut, which evidently takes effect 6th January, could unleash more than 800 million yuan that is $115 billion for long term lending. Central Bank also added that the Cut should help support the overall economic growth.
While this is happening, according to the private survey that was released on Thursday, China’s massive manufacturing industry grew last month though at a slower pace than in November.
The Caixin/Markit manufacturing purchasing managers index raised 51.5 in December that was lower than the 51.8 that it recorded during November. In fact, the reports suggest that it is the lowest reading since September. With all this, it is still above 50 point level reflecting the growth.
The important gauge missed these estimated analysts polled by Reuters who had the expectation to match November’s level.
As per the official PMI data that was released earlier this week for December matched November’s level of growth that was at 50.2 that luckily was slightly above the expectations.
The U.S. President Donald Trump Tweeted mentioning that he would sign the initial trade deal with China on 15th January at White House. Not only this, but the Tweet also revealed his plans of traveling to Beijing to start a new round of trade negotiations.
Let’s see what happens in the ongoing US-china trade war.