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China's major tech shares climbed about 2% on Tuesday after Beijing cut its benchmark lending rates for the first time in seven months, according to a Tuesday announcement by the People's Bank of China.
Alibaba (NYSE:BABA) led gains among internet giants, rising about 2% after the one-year prime rate fell to 3.0% from 3.1%. JD.com (NASDAQ:JD) and Baidu (NASDAQ:BIDU) also added roughly 2%, buoyed by hopes of cheaper corporate and consumer borrowing.
The central bank trimmed its one-year loan prime rate by 10 basis points and its five-year rate by the same amount to 3.5%, aiming to spur a struggling economy still feeling pandemic aftershocks and trade-war pressures.
Mortgage borrowers could see relief after the five-year rate cut, while businesses stand to benefit from lower financing costs. Analysts predict further cuts this year, with some forecasting another 40-basis-point reduction by December.
The rate moves lifted broader markets too: Hong Kong's Hang Seng index closed up 1.5% and mainland Chinese benchmarks also advanced.
With China targeting 5% GDP growth in 2025, these small but symbolic rate cuts may signal Beijing's willingness to deploy more monetary tools to shore up growth.
This article first appeared on GuruFocus.