China Stocks, Yuan Tumbled Yesterday After PBOC Unveiled RRR Cut

The reserve requirement cut comes after Beijing pledged to expedite plans to invest billions of dollars in infrastructure projects

A anxious China has injected $110 billion into its economy in the wake of the trade war with the USA in order to shore up business confidence.

The decision is meant to "further encourage the stable development of the real economy, optimise the liquidity structure of commercial banks and financial markets, lower financing costs, and to continue increasing the financial systems' efforts to support small businesses, private enterprise and innovation", the People's Bank of China said in a statement. "All news is against it", Fraser Howie, an independent analyst who has written books about China and its financial system, told CNBC's "The Rundown" on Monday.

The cut will fill in the liquidity gap of banks and put no downward pressure on the yuan, the central bank said in a statement, as the country's monetary policy has not been eased. But the central bank maintained that its monetary policy is still prudent and neutral - not accommodative. Richard Jerram, chief economist at Bank of Singapore, said while the Fed would not be panicked by the increase in wages "evidence that tight capacity conditions-such as a low unemployment rate-are pushing prices higher will keep them on the current tightening path".

Asian markets fell on Monday, extending last week's sell-off as another strong United States jobs reading further fanned expectations the Federal Reserve will hike interest rates at a quicker pace.

A prolonged trade war as the US economy appears strong may lead to more investors pulling money out of China. Beijing is therefore taking pre-emptive steps to avoid massive outflows of investor money from its financial system, analysts said, adding that could deal another blow to its economy which is already experiencing slower growth.

The total funds released by RRR cut is slightly more than the amount banks needed to repay their MLF.

Kavanaugh attends swearing-in ceremony at the White House
The climactic 50-48 roll call vote Saturday on Kavanaugh was the closest vote to confirm a justice since 1881. At a White House ceremony on Monday night, Mr Kavanaugh said he was starting his new job without bitterness.

Shanghai: China stocks tumbled on Monday, as investors back from a long holiday dumped shares across the board despite Beijing's weekend move to spur more lending at a time of growing fears the economic impact of the Sino-US trade war will deepen. The rest of Asian markets fell on Monday, extending last week's sell-off. Tokyo was closed for a public holiday.

The row has hit China's stock market and currency, and there are tentative signs it is affecting China's economy. The losses in NY seeped into Asia, where Shanghai sank 3.7 percent, while Hong Kong lost 1.4 percent in the afternoon with property firms hit by expectations the city's banks will lift mortgage rates again as they track a likely Fed hike.

"China is a bit nervous".

China has retaliated with its own set of tariffs, and has accused the United States of launching the largest trade war in economic history.

"He can worry about the debt problems three, four, five years down the line", Nicholson said.

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