Buildings in Pudong’s Lujiazui Financial District in Shanghai, China, on Monday, Jan. 29, 2024.
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Mainland China’s CSI 300 clocked its best day in over four years on Tuesday after Beijing announced a slew of policy easing measures in a rare briefing from central bank governor Pan Gongsheng.
The index rose 4.33%, notching its best day since July 2020, to close at 3,351.9.
Hong Kong’s Hang Seng index was up nearly 4% after the decision, also on track to see its best day in over seven months following the PBOC briefing.
The PBOC will cut the reserve requirement ratio for banks by 50 basis points, although it did not provide a specific timeline. It also announced it would cut the seven-day reverse repurchase rate from 1.7% to 1.5%.
Pan also said that authorities could cut the loan prime rate by 0.2 to 0.25 percentage points, without specifying whether he was referring to the one-year or five-year. The one-year LPR currently stands at 3.35% and five-year LPR is at 3.85%.
Other measures also include reducing down payments for second homes, as well as 1 trillion yuan ($141.78 billion) of long-term funds.
Winnie Wu, China strategist at Bank of America, described the move on CNBC’s “Street Signs Asia” as “a big bang to boost investor confidence in market.”
For the short term, they have a positive view on sectors like banking and insurance, but Wu added that domestic consumption recovery will take longer to recover. She said more is needed from fiscal policy and structural reform to make a market rally sustainable.
Elsewhere in Asia, Australia’s central bank held its benchmark policy rate at 4.35%, in line with expectations from economists polled by Reuters.
The Commonwealth Bank of Australia said in a note last week that the economic data flow since the last meeting “has either been softer or in line with the RBA’s expectations.” As such, CBA expects a slightly less hawkish statement, but does not see a material shift in language or tone.
Australia’s S&P/ASX 200 fell 0.13% after the decision, closing at 8,142.
Japan’s Nikkei 225 closed 0.57% higher at 37,940.59, while the Topix gained 0.54% to end at 2,656.73 as Japanese markets returned from a holiday.
Earlier in the session, the Nikkei crossed the 38,000 mark for the first time since Sept. 3.
South Korea’s Kospi rose 1.14% to close at 2,631.68, notching six straight days of gains, while the small-cap Kosdaq rose 1.62%, marking a seven-day winning streak and finishing at 767.35.
Overnight in the U.S., the Nasdaq Composite ticked up 0.14%, also mirroring gains made by the other two major U.S. indexes.
The S&P 500 and Dow Jones Industrial Average touched new closing highs in Monday’s trading session.
The broad market index added 0.28% to end at 5,718.57, while the Dow Jones Industrial Average gained 61.29 points, or 0.15%, to close at 42,124.65.
—CNBC’s Brian Evans and Alex Harring contributed to this report.