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Asian stocks rise after China rate cut as Beijing leaders thrash out reformst Asian stocks rise after China rate cut as Beijing leaders thrash out reforms
(4 days later)
Asia’s major financial markets reacted with caution to China’s latest interest rate cuts amid wariness about economic fundamentals.Asia’s major financial markets reacted with caution to China’s latest interest rate cuts amid wariness about economic fundamentals.
The People’s Bank of China said late on Friday said it was lowering the one-year benchmark bank lending rate by 25 basis points to 4.35% from Saturday.The People’s Bank of China said late on Friday said it was lowering the one-year benchmark bank lending rate by 25 basis points to 4.35% from Saturday.
Related: Why China's interest rate cut may be bad news for the world economyRelated: Why China's interest rate cut may be bad news for the world economy
China’s major stock indexes were up less than 1% at the end of the morning session, led by financials, in particular brokerages and smaller banks.China’s major stock indexes were up less than 1% at the end of the morning session, led by financials, in particular brokerages and smaller banks.
The Shanghai Composite index gained 0.7% to 3,437.03 points while the Hang Seng index in Hong Kong added 0.2%.The Shanghai Composite index gained 0.7% to 3,437.03 points while the Hang Seng index in Hong Kong added 0.2%.
In Japan, the Nikkei was up 0.85% after touching two-month highs on optimism that the Bank of Japan might follow the PBOC’s lead and suggestions from the European Central Bank that it could embark on another round of monetary easing. However, in Australia the ASX/S&P200 was down slightly.In Japan, the Nikkei was up 0.85% after touching two-month highs on optimism that the Bank of Japan might follow the PBOC’s lead and suggestions from the European Central Bank that it could embark on another round of monetary easing. However, in Australia the ASX/S&P200 was down slightly.
“The market was slightly buoyed by the central bank’s rate cut. Medium and small companies, and securities companies were relatively dynamic,” Said Zhang Qi, an analyst at Haitong Securities in Shanghai.“The market was slightly buoyed by the central bank’s rate cut. Medium and small companies, and securities companies were relatively dynamic,” Said Zhang Qi, an analyst at Haitong Securities in Shanghai.
“But the market appeared to be in correction after it rose a lot in October, and some investors sold stocks on the short-lived rise from the rate cuts. So overall, the market stayed stable today.““But the market appeared to be in correction after it rose a lot in October, and some investors sold stocks on the short-lived rise from the rate cuts. So overall, the market stayed stable today.“
The PBOC was lowered the one-year benchmark deposit rate by 25 basis points to 1.50%, and the bank also removed the ceiling on deposit rates, seen as enabling more competition between Chinese banks and also giving higher returns to savers, part of supporting consumption and reducing sloppy investment.The PBOC was lowered the one-year benchmark deposit rate by 25 basis points to 1.50%, and the bank also removed the ceiling on deposit rates, seen as enabling more competition between Chinese banks and also giving higher returns to savers, part of supporting consumption and reducing sloppy investment.
The amount of money banks must hold in reserve was also cut by 50 basis points for all banks, taking the ratio to 17.5% for the biggest lenders, adding around 700 billion yuan ($110.20 billion) to the money supply, according to analysts.The amount of money banks must hold in reserve was also cut by 50 basis points for all banks, taking the ratio to 17.5% for the biggest lenders, adding around 700 billion yuan ($110.20 billion) to the money supply, according to analysts.
The moves came as China’s ruling communist party opened a key meeting on Monday in Beijing that will focus on financial reforms and growth targets over the next five years.The moves came as China’s ruling communist party opened a key meeting on Monday in Beijing that will focus on financial reforms and growth targets over the next five years.
The central committee, the largest of the party’s elite governing bodies with more than 200 full members, is gathering until Thursday to finalise the 13th five-year plan, a blueprint for economic and social development between 2016 and 2020.The central committee, the largest of the party’s elite governing bodies with more than 200 full members, is gathering until Thursday to finalise the 13th five-year plan, a blueprint for economic and social development between 2016 and 2020.
Monetary policy easing in the world’s second-largest economy is at its most aggressive since the 2008/09 financial crisis, as growth looks set to slip to a 25-year-low this year of under 7%.Monetary policy easing in the world’s second-largest economy is at its most aggressive since the 2008/09 financial crisis, as growth looks set to slip to a 25-year-low this year of under 7%.
The official Xinhua news agency said the meeting –formally called a plenum – had opened in Beijing. It gave no other details.The official Xinhua news agency said the meeting –formally called a plenum – had opened in Beijing. It gave no other details.
The highly secretive event, normally held at the Jingxi Hotel in western Beijing, will end with a long communique released by Xinhua, and will then probably be followed by a more detailed statement about a week later.The highly secretive event, normally held at the Jingxi Hotel in western Beijing, will end with a long communique released by Xinhua, and will then probably be followed by a more detailed statement about a week later.