China stocks rise on cuts in lending benchmarks to revive economy

China stocks rise on cuts in lending benchmarks to revive economy

SHANGHAI, Aug 22 (Reuters) - China stocks rose on Monday, after the country cut its benchmark lending rate and lowered the mortgage reference by a bigger margin to revive an economy hobbled by a property crisis and a resurgence in COVID-19 cases.

** The CSI300 Index .CSI300 went up 0.8% at the end of the morning session, while the Shanghai Composite Index .SSEC added 0.6%.

** The Hang Seng Index .HSI edged up 0.2%, and the Hang Seng China Enterprise Index .HSCE rose 0.5%.

** The one-year loan prime rate (LPR) CNYLPR1Y=CFXS was lowered by 5 basis points to 3.65% at the central bank's monthly fixing, while the five-year LPR CNYLPR5Y=CFXS was slashed by 15 basis points to 4.30%.

** "Most home mortgages are linked to the 5Y loan prime rate. So this rate cut is obviously to reduce the burden on borrowers," said Iris Pang, Greater China chief economist, ING.

** "At the same time, some local governments have started to lend to property developers to continue the construction of uncompleted homes. The two measures together should reduce the concern of existing home mortgage borrowers."

** The real estate sub-index .CSI000952 rose 0.5%, following a 2.7% jump in the previous session on LPR cut expectations.

** In addition to the property segment, the five-year LPR cut will also benefit rate-sensitive sectors including infrastructure, said Chen Jiahe, chief investment officer of Beijing-based family office Novem Arcae Technologies.

** The asymmetrical cuts "make people more willing to invest in long-term projects, like infrastructure and renewable energy", he added.

** The energy sub-index .CSIEN gained 1.7%, resource .CSI000805 surged 2.4%, while non-ferrous metal .CSI000811 soared 3%.

** New energy vehicles .CSI399976 and automobiles .CSI931008 both added about 2.5%.

** "Going forward, I expect more policy measures to solve the property market riddle," said David Chao, Global Market Strategist, Asia Pacific (ex-Japan) at Invesco.

** Mainland developers traded in Hong Kong .HSMPI also jumped 1.7%, while tech giants listed in the city .HSTECH were almost flat.


Reporting by Shanghai Newsroom; Editing by Rashmi Aich