Understanding the Market | Chinese bank stocks rose across the board in early trading. The impact of interest rate cuts on net interest margins of banks is overall neutral. Improvement in economic indicators will drive sector recovery

In the morning session, Chinese bank stocks rose across the board. As of the time of publication, JIANGXI BANK rose by 8.62% to HKD 0.63; China Merchants Bank rose by 5.39% to HKD 36.15; China Construction Bank Corporation rose by 2.7% to HKD 6.09; ICBC rose by 1.7% to HKD 4.78. On the news front, People's Bank of China Governor Pan Gongsheng revealed that in the design of this interest rate adjustment plan, the People's Bank's technical team conducted multiple rounds of serious quantitative analysis and evaluation. The policy changes have a neutral impact on bank income, and the net interest margin of the banking industry will remain basically stable. It is worth noting that Li Yunze, Director of the China Banking and Insurance Regulatory Commission, announced plans to increase the core Tier 1 capital of 6 large commercial banks. Dongguan Securities pointed out that recently, a combination of policies related to real estate, monetary policy, and others have been successively implemented. It is recommended to pay attention to the implementation of various stabilizing growth policies, grasp the key period of expectation and confidence reversal. If subsequent support policies continue to be effective, it will fundamentally improve the operating environment of the banking industry. Positive changes in subsequent economic indicators may become an important catalyst for the recovery of the banking sector