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Asian equities were largely higher as Japan outperformed post-holiday.
After yesterday’s close, the People’s Bank of China (PBOC), China’s central bank, announced it will “strengthen counter-cyclical and cross-cycle regulation” as intra-bank lending rates are expected to be cut along with the bank reserve requirement ratio. The verbal jawboning helped Mainland China manage a small gain after yesterday’s rout driven by news that mutual fund families would be allowed to increase fund redemptions. However, I did not see significant redemptions from China-listed equity ETFs, including those with Hong Kong exposure.
The PBOC’s announcement extended the rally in bonds at the expense of Mainland stocks. If you know they are going to cut rates, why not buy bonds? Bonds indeed rallied, with the 10-year Chinese Government Bond Yield hitting a 52-week low, which is a level last seen in April 2019 and near the…
