Markets react to PBOC's latest RRR cut

GAINS in China, Hong Kong and the Dow futures helped the Straits Times Index (STI) rise 15.88 points to 2,682.39 on Tuesday, in decent volume of 1.4 billion units worth S$1.5 billion. Of this, S$927 million or 62 per cent came from trading in index members, while the broad market recorded an advance-decline score of 232-147, excluding warrants.

After the market closed on Monday, China's central bank, the People's Bank of China (PBOC), had cut its banks' reserve requirement ratio (RRR) by 0.5 percentage points, which means most large China banks will have a reserve ratio of 17 per cent.

The Economist's Intelligence Unit's regional director for Asia Duncan Innes-Ker said the cut showed the central bank straining to maintain loose monetary conditions in a difficult economic climate.