BEIJING: Chinese stocks rose 3 percent on Monday in volatile conditions, boosted by property and infrastructure shares after the central bank cut interest rates for the third time in six months to support the world’s second-biggest economy.
Money rates eased to a four-year low while the yuan CNY=CFXS steadied after the People’s Bank of China said on Sunday it was lowering its benchmark one-year lending and deposit rates by 25 basis points, the third cut in six months, to help support an economy headed for its slowest growth in a quarter of a century.
While the rate cut had been widely expected, the move combined with a continued rally in small-caps gave investors an excuse to pick up shares which marked their biggest decline in nearly 5 years last week, analysts said.
“The timing of the rate cut is well within expectations while the depth of the cut is smaller than many had expected,” said Zhang Chen, analyst at Shanghai-based hedge fund manager Hongyi Investment.
“The market is in a consolidation period, and I don’t think the rate cut could change that pattern.”
The CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen closed up 2.9 percent, while the Shanghai Composite Index .SSEC finished up 3 percent. The Hang Seng Index .HSI was up 0.7 percent as of 0730 GMT.
