ICBC, China Banks Climb in Hong Kong on Reserve Ratio Cut

Industrial & Commercial Bank of China Ltd. led local rivals higher in Hong Kong trading after China’s central bank yesterday said it will cut the reserve requirement for the first time in almost three years.

Shares of ICBC rose 7.7 percent to HK$4.64 as of 9:57 a.m. local time, heading for its biggest one-day gain in a month. China Construction Bank Corp. advanced 4.6 percent and Bank of China Ltd. climbed 7.5 percent. Reserve requirements for banks will decline by 50 basis points effective Dec. 5, the central bank said on its website yesterday.

The cut, the first since 2008, may increase the likelihood of a “soft landing” as the world’s second-biggest economy slows, May Yan, an analyst at Barclays Plc, said in a note to clients. The move may free up 396 billion yuan ($62 billion) in the financial system, she estimated.

“The move should help improve the liquidity of the banking system,” Stanley Li, an analyst in Hong Kong at Mirae Asset Securities (HK) Ltd., wrote in a research report today. “We see this RRR cut as a short-term positive for banks, particularly smaller banks.”

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