HONG KONG: Hong Kong stocks rallied 1.95 percent on Monday and Shanghai also jumped after China’s central bank announced a surprise interest rate cut in an attempt to strengthen growth.
The Hang Seng Index added 456.02 points to 23,893.14 on turnover of HK$105.25 billion ($13.58 billion).
The People’s Bank of China Friday slashed its one-year rate for deposits by 25 basis points to 2.75 percent, and its one-year lending rate by 40 basis points to 5.6 percent.
Friday’s announcement—of the first cut since July 2012—followed a series of weak figures indicating the world’s number two economy, a key driver of global growth, is struggling.
HSBC last week said its index of manufacturing activity in China showed the sector had stagnated in November. That came after other data on trade and industrial output also highlighted weakness.
“The key is not the rate cut itself, but rather whether the rate cut could start bringing down the real interest rate,” Credit Suisse said, according to Dow Jones Newswires.
“If this rate cut is not stopped here but followed by a couple of rounds of cuts . . . it would help boost the market.”
In New York Friday the Dow climbed 0.51 percent and the S&P 500 gained 0.52 percent—both ending at new record highs—while the Nasdaq added 0.24 percent.