August 19, 2019 / 4:31 AM / a year ago

China, HK stocks extend rally after Beijing unveils rate reform

* SSEC 1.5%, CSI300 1.5%, HSI 1.9%

* HK->Shanghai Connect daily quota used 4.4%, Shanghai->HK daily quota used 1.8%

* FTSE China A50 +1.0%

SHANGHAI, Aug 19 (Reuters) - China and Hong Kong stocks rose on Monday, on track for their fourth consecutive session of gains, as investors cheered Beijing’s latest measures to underpin an economy pressured by a bruising trade dispute with the United States.

** The CSI300 index rose 1.5% to 3,767.27 points at the end of the morning session, while the Shanghai Composite Index gained 1.5% to 2,865.32 points.

** The Hang Seng index added 1.9% to 26,216.23 points, while the Hong Kong China Enterprises Index gained 1.4% to 10,100.85 points.

** China’s central bank unveiled a key interest rate reform on Saturday to help steer borrowing costs lower for companies and support a slowing economy that has been hurt by a trade war with the United States.

** The move, widely seen as a guided rate cut, came after Beijing’s latest plan to spur private consumption to shore up growth.

** The rate reform will further boost monetary policy loosening expectations for the short term, helping lift risk appetite, China Merchants Securities noted in report.

** For the longer-term, there would be stronger support for the stock market, as companies’ expected investment returns could benefit from lower borrowing costs, thus, improving financing needs and alleviating the downward pressure on the economy, the brokerage added.

** Shares in real estate firms, which are expected to benefit from lower borrowing costs, led the gains in the market.

** Bucking the broad rally, banking firms softened, as lenders expected their profitability to come under pressure after the rate reform.

** “(China’s banks will) face a narrower net interest margin. This is because all banks need to quote according to a more market-based interest rate, and competition on loans will increase,” analysts at ING wrote in report.

** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 1.02%, while Japan’s Nikkei index was up 0.64%.

** The yuan was quoted at 7.0455 per U.S. dollar, 0.05% weaker than the previous close of 7.042.

** The largest percentage gainers in the main Shanghai Composite index were Zhejiang Hugeleaf Co Ltd, up 10.2%, followed by DuZhe Publishing & Media Co Ltd, gaining 10.05% and Shenzhen Gas Corp Ltd, up by 10.04%.

** The largest percentage losses in the Shanghai index were Zhejiang Dingli Machinery Co Ltd, down 10%, followed by Junhe Pumps Holding Co Ltd, which lost 9.98% and Jiangxi Lianchuang Opto Electronic Science & Technology Co Ltd , which slipped 5.62%.

** The top gainers among H-shares were CITIC Securities Co Ltd, up 6.6%, followed by Country Garden Holdings Co Ltd, gaining 5.61% and Haitong Securities Co Ltd , which rose 5.57%.

** The three biggest H-shares percentage decliners were ENN Energy Holdings Ltd, which dropped 2.45%, China Gas Holdings Ltd, which lost 1.4% and China Telecom Corp Ltd, down by 1.1%.

** About 12.12 billion shares have traded so far on the Shanghai exchange, roughly 79.4% of the market’s 30-day moving average of 15.26 billion shares a day. The volume traded was 14.86 billion shares, as of last trading day.

** As of 0416 GMT, China’s A-shares were trading at a premium of 30.09% over the Hong Kong-listed H-shares.

Reporting by Luoyan Liu and John Ruwitch, Editing by Sherry Jacob-Phillips

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