China will cut bank reserve ratio requirements in early February, People's Bank of China Gov. Pan Gongsheng said Wednesday, the latest move or report that Chinese authorities are seeking to buoy Chinese stock markets. Hong Kong's Hang Seng index leapt 3.6% after Tuesday's 2.6% jump. Alibaba, JD.com, PDD Holdings, Nio, NetEase and other U.S.-listed stocks rose before the open.
The PBOC will cut China's reserve ratio requirement, or how much money banks must keep in reserve, by 50 basis points on Feb. 5, Pan said. That will free up 1 trillion yuan ($139 billion) in funds for lending, Pan
China's economy is struggling, while its stock markets have been hitting multiyear lows as foreign investors pare their exposure.
On Tuesday, Chinese stocks got a lift on a report that Chinese authorities are mulling a stock market rescue fund. Also Tuesday, China's gaming regulator removed from its website draft rules that would have imposed new restrictions on online gaming. That had hit gaming firms such as NetEase, Tencent Holdings, and revived concerns about a renewed tech crackdown broadly.
Chinese Stocks
U.S.-listed Chinese stocks rallied early Wednesday. BABA stock rose 1.9% after surging 7.85% in Tuesday's rally. Rival e-commerce giant JD.com climbed nearly 3% after Tuesday's 7.2% spike. Both are bouncing from multiyear lows.
PDD stock, parent of China's Pinduoduo e-commerce giant and the international Temu site, advanced 2%. Shares closed down 0.3% Tuesday but are trading near their best levels in nearly three years.
EV makers Nio gained 5% and Li Auto rose 4% after they advanced 3.85% and 3.3%, respectively, on Tuesday. EV and battery giant BYD, which trades over the counter in the U.S., was not yet trading after Tuesday's 4% pop. All have tumbled in the past several weeks.
NTES stock popped 5% after Tuesday's 7.85% spike. Tencent stock, trades over the counter in the U.S., was not trading yet after Tuesday's 3.7% gain.
Still, while Chinese stocks are getting a lift in the short run, the policy steps discussed don't address a long-ailing property sector, a less-inviting environment for foreign investment and increasing U.S.-Sino tensions.
Please follow Ed Carson on Threads at @edcarson1971 and X/Twitter at @IBD_ECarson for stock market updates and more.
