China Cuts Key Mortgage Rate

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 Lately, here's the stuff troubling China:

⚠ Concerns of an overall economic slowdown as the Omicron-Delta tag team do their stuff in the mainland. 

⚠ A faltering real estate sector with developers up to their penthouses in debt. 

To help the real estate and construction sector face a perfectly forming storm, China's central bank cut a key mortgage rate for the first time in almost two years, per the BBC.

Some Background

Beijing surprised markets on Monday by cutting rates on medium-term loans for the first time since April 2020. And on Thursday, the People's Bank of China (PBOC) cut its five-year loan prime rate, which is the reference rate used for mortgages, from 4.65% to 4.6%.

The PBOC also slashed its benchmark lending rates for corporate and home loans for the second month in a row.

And Investors Are Elated

Almost immediately, stocks of Hong Kong-listed Chinese property developers rose sharply, making good some of the losses they have faced recently.

Sunac China closed 15.2% higher, while Shimao Group and Logan Group both saw their stock prices rise by more than 10%. Even the bullet-riddled Evergrande Group ended the trading day up by 4.6%.

Investors were also reacting to reports that Chinese regulators may ease restrictions on developers' access to pre-sale escrow funds.