US-listed Chinese stocks broadly higher after PBOC announces stimulus

Investing.com -- US-listed Chinese stocks surged on Tuesday following the People's Bank of China (PBOC) announcement of a comprehensive stimulus package aimed at boosting the economy.

Notable gainers include Tencent Music (+7.4%), Netease (+6.9%), Alibaba (NYSE:BABA ) (+6%), and PDD (+5.3%). The PBOC's measures exceeded market expectations, providing a boost to investor confidence.

In a note Tuesday, JPMorgan highlighted the key components of the package, which include a 50 basis-point cut to the reserve requirement ratio (RRR), a 20 basis-point cut to the 7-day reverse repo rate, and a 50 basis-point reduction in mortgage rates.

The PBOC also unified the downpayment requirements for first and second homes, easing liquidity for the housing market. This stimulus package is viewed as the most comprehensive since 2015, offering substantial liquidity injections to the banking system, with expectations for further RRR cuts before the year-end.

JPMorgan's note emphasized the magnitude of the easing measures, which surpass the responses seen during the COVID-19 outbreak in 2020.

"Today's announcement from the PBOC beat market expectations and is arguably the most comprehensive easing since 2015," the bank wrote, noting that the policy moves aim to restore market confidence amidst ongoing economic challenges, including fragile domestic demand and deflationary pressures.

While the PBOC's actions provide near-term relief, JPMorgan cautioned that monetary easing alone may not be enough to sustain long-term growth, urging for more fiscal support.

Nonetheless, this stimulus package has boosted optimism in the market, lifting key Chinese tech stocks listed in the US.

The stimulus, alongside the potential for further rate cuts, is expected to help stabilize China's economy.

Source: Investing.com