China's CSI 300 Hits 13-Month Low as Central Bank Cuts Lending Rate

Mainland Chinese stocks fell to their lowest levels in over a year, driven by a sell-off in technology shares, despite Beijing's efforts to bolster the economy with a significant interest rate reduction. On Monday, the CSI 300 Index dropped 2.2 per cent, marking its lowest point since August 21 of the previous year, while the Star Market 50 index plummeted 4.1 per cent. In the third quarter, the Star Market 50 experienced a staggering 31 per cent decline, contributing to a 12 per cent drop in the CSI 300. Analysts cautioned that both mainland Chinese and Hong Kong stocks might encounter challenges in the fourth quarter due to lackluster stimulus, potential interest rate hikes, and shifting attitudes towards AI investments. On Tuesday, the central bank lowered the one-year pledged supplementary lending rate from 1.75 per cent to 1.5 per cent to stimulate funding for priority projects. Additionally, a mortgage interest subsidy program for first-time homebuyers was introduced, providing a 1 percentage point annualized interest subsidy for up to five years on loans up to 1 million yuan (US$149,000). Meanwhile, Chinese government bonds gained new interest as US Treasury yields reached a record high.