Mortgage

Property shares in Hong Kong jump after China cuts key mortgage rate

Property shares in Hong Kong jump after China cuts key mortgage rate
Written by Publishing Team

A child reacts to auspicious tiger street lighting in Hohhot, Inner Mongolia, China.

This comes as China prepares to celebrate the Lunar New Year next month

Shares of Chinese property developers jumped in Hong Kong as China’s central bank lowered its main mortgage rate for the first time in nearly two years.

The decision comes as concerns grow about a slowdown in the world’s second-largest economy amid the Omicron disease outbreak.

Meanwhile, major Chinese real estate companies, such as crisis-stricken Evergrande, are struggling to repay debts.

On Monday, China surprised markets by cutting interest rates on medium-term loans for the first time since April 2020.

On Thursday, the People’s Bank of China (PBOC) lowered the five-year loan prime rate, the reference rate used for mortgages, from 4.65% to 4.6%.

This cut was the first of its kind since April 2020, at the height of the coronavirus pandemic in China.

The People’s Bank of China (PBOC) also cut benchmark lending rates for corporate and household loans for the second month in a row.

In Hong Kong, the benchmark Hang Seng Index is up 2.5% on the news.

In Hong Kong, property developers’ stock prices have risen sharply, reversing some of the losses they’ve seen in recent months.

Chinese real estate firms Sunac China, Shimao China and Logan Group saw their shares rise more than 10%, while shares of doomed Evergrande rose 4%.

Investors were also reacting to reports that Chinese regulators may ease restrictions on their access to pre-sale funds.

The People’s Bank of China’s moves come as Beijing tries to protect the country’s economy amid mounting signs of slowing growth.

Official figures showed, on Monday, that gross domestic product grew by 4% for the last three months of 2021 compared to the previous year.

This was better than most economists had expected but much slower than the previous quarter.

In another sign of weak retail sales growth fell to 1.7%.

Some economists also highlighted that the growth data, which was the slowest in a year and a half, had not yet taken into account the impact of the recent coronavirus outbreak.

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