Chinese equities rallied on Thursday after the People’s Bank of China (PBoC) jumped on the easing bandwagon, but the rest of Asian indices fell on uncertainty over Greece’s bailout program.
Late on Wednesday, the Chinese central bank reduced reserve requirements for banks by 50 basis points for the first time in two years. The move marked a change from the central bank’s previous low-profile attempts to increase liquidity and follows the trend of global monetary stimulus seen in the past month.
“We think the impact [of the RRR cut] on the real economy is positive but it is not enough to stabilize the economy, as it helps to raise loan supply but loan demand may remain weak. We expect more easing measures to come, such as another RRR cut of 50bp in Q2,” Deutsche Bank economists said in a note.