China Stimulus Ignites "Increasingly Friendly" Regime For Stocks, But...

Amid the market's seasonally-weakest period of the year - but with stocks juiced to record highs on The Fed's crisis-like 50bps rate-cut - China's PBOC unleashed one of the largest / strongest moves since the height of COVID.

Until now, its been fairly piecemeal in nature and rather uncoordinated leaving lukewarm reactions, but today's announcement was significant...

• 150bp RRR cut releasing 1trn CNY, with scope to cut more by year-end dependent on ‘market conditions’

• 450b CNY OMO to take us over Golden Week

• 20bp 7d repo rate cut from 1.70% to 1.50%

• 1y MLF rate cut by 30bp from 2.30% to 2.00%

• Continue to reduce mortgage rates down on existing loans by 50bp.

• Liquidity facilities from which dealers/funds can borrow funds from the PBOC to buy mainland stocks

• Expansion of funding program to support social housing purchases of unsold inventory.

• Deposit rate cuts to neutralize impact of funding on bank margins