Volatility ensued in China’s equity markets early Monday after the country’s central bank lowered the reserve requirement ratio (RRR) for all banks by 100 basis points over the weekend.
The wider-than-expected cut on Sunday was the People’s Bank of China’s (PBoC) second reduction in two months as the world’s second-largest economy combat slowing growth. The move to spur bank lending was also a “calming act” following a sharp selloff in stock futures and global equities on Friday when authorities announced a crackdown on over-the-counter margin trading.
“The RRR cut attempted to put a calm on markets after Friday’s news, but the magnitude of the cut was more than what the market priced in,” Catherine Yeung, investment director at Fidelity Worldwide Investment, told CNBC Asia’s “Squawk Box.”
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