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China: Consumer goods in the Mainland could lead to GDP growth by 0.3 percentage points, or increase household appliance sales by 15%
China's Ministry of Finance issued a notice on “Certain Measures to Support Large-Scale Equipment Upgrades and Replacement of Consumer Goods” by the National Development Reform Commission and the Ministry of Finance. Proposed the coordination of around RMB 300 billion (below) in ultra-long term special government debt financing, and strongly supported large-scale equipment upgrades and the replacement of old consumer goods. This indicates a further decline in positive fiscal policy, which the Bank expects could drag down GDP growth by around 0.3 percentage points.
Morgan Stanley: Focus on managing net interest spread as internal banks confirm lowered deposit rates.
JPMorgan released a report stating that the announcement by six large state-owned banks of a reduction of deposit interest rates on the previous day (25th) was not unexpected, based on earlier media reports. The bank reiterated its positive view on China mainland banking, based on the narrowing net interest margin gap of two basis points resulting from the reduction of deposit interest rates and loan market quote rates (LPR), which is estimated to increase the bank's earnings by 2% next year. The rapid reduction of deposit interest rates also confirms the bank's view that regulatory authorities and banks are more focused on stabilizing the net interest margin. The bank believes that future interest rate cuts will be symmetrical, and the reduction of deposit interest rates will be accompanied by a reduction in LPR. The bank also noted that regulatory authorities are cracking down on banks' artificial intervention in interest rates, including deposits.
Hang Seng Index rose 28 points in half a day, with electronic related stocks being popular. Eastbuy fell 21%.
The US economy grew better than expected in Q1. The Dow rose more than 500 points the night before (25th) and closed up 81 points or 0.2%. Hong Kong stocks rebounded with the external market in the morning, and the Hang Seng Index opened high with 74 points, rose 224 points in the initial stage, saw 17,229 points and then fell back. It had previously fallen as much as 80 points to 16,924 points and then rose 28 points or 0.17% in the morning and reported 17,033 points. The national index fell 4 points or 0.1%, reported 6,012. The Hang Seng Technology Index rose 22 points or 0.7%, reported 3,443. The total turnover of the market in half a day was 60.193 billion yuan. The net inflow of Shanghai, Shenzhen and Hong Kong Stock Connect transactions was 2.42 billion and 14.88 billion respectively.
HSBC Research: Lowering deposit rates for domestic banks is a surprise. Preferential construction bank (00939.HK), industrial and commercial bank (01398.HK), Bank of China (03988.HK), China Merchants Bank(03968.HK) and HKEX (00388.HK).
HSBC Research has published a research report indicating that major banks in mainland China have recently lowered deposit rates, causing surprise. Although current deposit rates are already low, there is still room for further reduction, and the reduction in interest rates for fixed-term deposits of 2 to 5 years exceeds the reduction in LPR. Therefore, it is expected that the cost of transferring the reduction in LPR to deposit costs may increase from the originally expected 25% to close to 50% to 100%. Assuming a transfer rate of 50%, the bank's net interest margin (NIM) is expected to be affected by approximately 1 to 2 basis points, or a reduction in profit of 1% to 2.3%. If the transfer rate is 100%, the impact on the bank's NIM and profit will be more severe due to a greater proportion of deposit balances subject to the reduced interest rates.
Government bond futures hit a new historic high yesterday. Analysis suggests the fundamental aspects of the market still support a further decline in bond yields.
According to a report from the Shanghai Securities News, the national bond futures hit a new historic high following the news of a state-owned bank lowering deposit rates and the central bank lowering MLF operational rates by 20 basis points. Yesterday (25th), the main contract for the 30-year national bond futures rose by 0.4%, setting a new closing high, while the main contract for the 10-year national bond futures fell slightly but still reached a historic high during the trading day. Analysts believe that although short-term interest rates have significantly declined after the interest rate cut, long-term interest rates remain relatively restrained, but fundamental factors still support further declines in bond yields. In the current market sentiment and policy environment, institutions suggest that investors be cautious in bond investment and avoid excessive operations.
Starting from today, cm bank (03968.HK) will decrease its deposit interest rate.
CM Bank (03968.HK) (600036.SH) announced that the bank has adjusted its deposit rates today (26th). After the adjustment, the interest rate for three months is 1.05%, six months is 1.25%, one year is 1.35%, two years is 1.45%, three years is 1.75%, and five years is 1.80%. Compared to before, the interest rates for fixed deposit accounts of one year or below were reduced by 10 basis points, while those for two, three, and five years were reduced by 20 basis points.
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