Hong Kong shares to open higher Mon., after policy change
Hong Kong and China constituent shares are likely to move higher on Monday morning after the move by Beijing on Saturday to reduce reserve requirements for commercial lenders.
This will likely affect short sellers which accounted for close to 8 per cent of total turnover on the Hong Kong stock exchange.
This is the second time in two months the RRR has been reduced. The move is likely to boost lending capacity in China by an estimated 350-400 billion yuan ($55.6-$63.5 billion), aimed at freeing up credit for businesses to grow.
It comes at a time when all eyes are still on the eurozone and Greece and until this is resolved it is still the main drag on export growth for China.
Financials and growth-sensitive sector stocks are likely to be early beneficiaries of the policy move by China.
In 2012 to date, the Hang Seng Index is up 16.5 percent. However, the China Enterprise Index is up 17.9 percent, outperforming mainland markets, with the Shanghai Composite Index up 7.2 percent so far.
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