The Hang Seng Index fell 0.4 per cent to 20,728.90 as of 11.05am local time. The Hang Seng Tech Index lost 0.1 per cent. Macau casino operator Sands China led the decline before its quarterly results announcement later on Monday.
Mainland benchmarks advanced: the CSI 300 Index and the Shanghai Composite Index both climbed 0.4 per cent.
In an expected move, China cut the five-year loan prime rate (LPR), a benchmark reference to the mortgage rate and other long-term lending rates, by 25 basis points to 3.6 per cent, according to a statement by the central bank on Monday. The one-year LPR was also slashed by the same magnitude to 3.1 per cent. The reduction fell in line with the comment on rate cuts by central bank governor Pan Gongsheng on Friday.
Investors looked past the cut in borrowing costs to focus on the actions of the standing committee of the legislative National People’s Congress in coming weeks for fiscal stimulus. The legislature is widely expected to approve an increase in government spending and to raise the quota on government bond issuances. The bull run that has driven stocks in Hong Kong and China up by more than 20 per cent since the end of September has slowed recently, as traders wait for more signals from Beijing to rejuvenate growth.
“China’s economy is still fragile, and turning the ship around will take more than a few rate cuts or short-term liquidity injections,” said Stephen Innes, managing director with SPI Asset Management in Bangkok. “The pressure on Beijing to deliver bolder fiscal reforms and more substantial stimulus measures is intensifying, but whether they will answer that call with the force needed remains to be seen.”
