01 Jun 2022

China’s stimulative policy actions: Turning the tide for investors

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by Han Peng, Senior Analyst
Seema Shah, Managing Director, Chief Strategist

China's ongoing struggles with COVID-19 and the country's lackluster policy response have dismayed investors. In fact, by the end of April, MSCI China had dropped 18% since the start of 2022, credit spreads had widened meaningfully, and the renminbi (RMB) had depreciated almost 4%. However, a series of weak economic numbers appear to have alerted policymakers to the urgency of stabilizing growth. On May 20, 2022, the People's Bank of China (PBoC) announced a surprisingly forceful response, cutting the five-year loan prime rate (LPR) by 15bps—the largest cut in this rate since LPRs were introduced in 2019. Following the stimulative policy action, investors are now wondering if the tide has turned on Chinese equities and its battered housing market. Download the latest bulletin from Principal Global Insights to read more of our perspectives.

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