Rate cut; CSRC meetings; Hong Kong; Sora frenzy; SOE PAFDs
Summary of today’s top items:
New mortgage rates dropping - The People’s Bank of China cut the five-year loan prime rate (LPR) by 25 basis points to 3.90% from 4.20% but kept the one-year LPR was left unchanged at 3.45%. A cut in the five year rate was expected, but not of this magnitude. Most mortgages are based on the five year LPR, so this cut is marginally positive for homebuyers, though it should not affect most existing mortgages until next January as the interest rate of existing mortgages reset at the start of the new year. A cut had been expected before the end of the last year but did not happen. I have seen some cynical speculation that the PBoC delayed that expected LPR cut so it would not factor into the January mortgage rate reset, thus hitting bank profits more, and then rolled that delayed cut into this one for a larger 0.25 percentage cut. The stock market was not particularly impressed and no analysts seem to think this cut will have anything more than a marginal impa…