China rolls out rate cuts, slashes RRR to revive economy: China’s central bank, the People’s Bank of China, is rolling out a series of broad monetary stimulus measures to jumpstart the country’s faltering growth. The central bank slashed a key short-term interest rate and lowered the reserve requirement ratio (RRR) to its lowest point since 2018, while hinting at further RRR cuts to come.

And there’s more: The package includes reducing borrowing costs on USD 5.3 tn worth of mortgages and lowering down-payment requirements for second homes in a bid to resuscitate the country’s troubled property sector. On top of that, CNY 800 bn (USS 113 bn) is being added into the stock market to boost liquidity, with officials also looking into setting up a market stabilization fund.

Big picture: This is the first time since 2015 that China has cut both the reverse repurchase rate and the RRR on the same day, Bloomberg reports. It comes after economic growth slowed to its worst pace in five quarters, putting the country on track to miss its annual economic growth target of 5% for the second time in three years.

Will it be enough? China’s benchmark CSI 300 Index jumped 4.3% on the news, while the CNY strengthened to its strongest level in over a year. Still, some doubt the cuts will be enough to revive the real estate market, with several doubting whether the measures are enough to stimulate a property market recovery.

MARKETS THIS MORNING-

China’s Hang Seng extended its gains in the wake of the economic package, up 2.6%, and defying the lull prevalent among other Asian markets. Japan’s Nikkei was marginally down, while the Topix was up only 0.3%.

Wall Street futures are also largely flat, after the S&P 500 and Dow closed at record highs yesterday.

EGX30

30,871

-0.5% (YTD: +24.0%)

USD (CBE)

Buy 48.62

Sell 48.76

USD (CIB)

Buy 48.63

Sell 48.73

Interest rates (CBE)

27.25% deposit

28.25% lending

Tadawul

12,268

+1.1% (YTD: +2.5%)

ADX

9,461

+0.1% (YTD: -1.2%)

DFM

4,461

+0.6% (YTD: +9.9%)

S&P 500

5,733

+0.3% (YTD: +20.2%)

FTSE 100

8,283

+0.3% (YTD: +7.1%)

Euro Stoxx 50

4,941

+1.1% (YTD: +9.3%)

Brent crude

USD 75.17

+1.7%

Natural gas (Nymex)

USD 2.58

+1.1%

Gold

USD 2,682.60

+0.2%

BTC

USD 64,352.70

+1.8% (YTD: +52.5%)

THE CLOSING BELL-

The EGX30 fell 0.5% at yesterday’s close on turnover of EGP 4.2 bn (6.0% above the 90-day average). Local investors were the sole net buyers. The index is up 24.0% YTD.

In the green: Elsewedy Electric (+6.2%), Sidi Kerir Petrochemicals (+2.1%), and GB Corp (+1.9%).

In the red: EFG Holding (-2.8%), Ezz Steel (-2.6%), and E-finance (-2.2%).

CORPORATE ACTIONS-

Sidi Kerir Petrochemicals (Sidpec) will give shareholders 0.20 shares per existing share following a capital increase to distribute the company’s net income from 2023, according to a disclosure (pdf) to the EGX. In total, 151.2 mn shares will be distributed with a nominal value of EGP 2 per share on 10 October for shareholders as of 9 October.

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