Video

Playlist: 03988:xhkg

Show less
23:57
Macro Monday WK 36: Binary BoC, mute Fed, Fed Flock — #SaxoStrats
Kay Van-Petersen
04 September 2017 at 7:38 GMT
3:07
China's rate cut - what's next?
Pauline Loong
25 November 2014 at 11:02 GMT
4:38
Hardy: Yen and Sterling weakness dominate FX week ahead
John J Hardy
14 November 2014 at 11:24 GMT
3:30
The forbidden currency: when will the RMB go global?
Pauline Loong
12 September 2014 at 12:52 GMT
2:31
Fragile China sees services stabilise
Angus Walker
03 June 2014 at 9:44 GMT
1:58
China: Handle with care
Angus Walker
10 April 2014 at 9:10 GMT
2:13
China's short-term pain will lead to long-term gain
Angus Walker
11 March 2014 at 10:16 GMT
2:08
Why China's credit crunch keeps traders concerned
Lea Jakobiak
17 February 2014 at 9:04 GMT
1:09
Why I'm moving back into Chinese banks
Fredrik Oqvist
02 September 2013 at 6:52 GMT
1:05
How I'm trading China's new banking rules
Fredrik Oqvist
22 July 2013 at 6:23 GMT
1:03
SAXO TV: Trading The China Cash Squeeze
Fredrik Oqvist
25 June 2013 at 15:33 GMT
Video / 25 November 2014 at 11:02 GMT

China's rate cut - what's next?

Pauline Loong
China took markets by surprise last week, when it cut interest rates for the first time in over two years. The People's Bank of China cut its one year deposit rate to 2.75% from 3.0% to try to revive its economy. The one-year lending rate was also reduced from 6% to 5.6%.

The move sent markets up across Asia and Europe with the Shanghai Composite index jumping 1.9% to 2,532.88 on the news and Hong Kong's Hang Seng also rising 1.9% to 23,893.14. The German DAX rose 0.7% while France's CAC-40 was up 0.9%.

It remains to be seen what impact the rate cut will have on the Chinese economy, says Pauline Loong from Asia-analytica. As China is not an open and free economy, the multiplier effects of the rate cut on the broader economy will differ to how the economy would react in say Britain, the United States or other free market economies, says Pauline.

She says market sentiment rather than the economy is the decisive factor for China when it decides on its monetary policy. Beijing wants private sector investments to boost its economy and market sentiment is key to attract these investments. 

China will be keeping a close eye on the mood in the markets in coming weeks, according to Pauline. She sees no need to China to take further action to boost the economy ahead of a key December meeting, where Beijing will decide on its economic strategy for 2015. But should market sentiment start to sink, then China may start hinting a future action to lift the mood.



Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail