China Slashes Loan Prime Rates by 10bps, Mainland and HK Equities Rise as Hang Seng Jumps 1.46%

Key Moments:

Markets Surge on Renewed Optimism

Stocks listed on Chinese and Hong Kong benchmark indices advanced on May 20th, a market rally that followed China’s decision to lower its benchmark lending rates for the first time in seven months. The SSE composite climbed by 0.38% to 3,380.4780, while the CSI 300 Index rose 0.54% and hit 3,898.1705. In Hong Kong, the Hang Seng Index achieved substantial gains of around 340 basis points, marking a notable 1.46% jump to 23,673.01.

Policy Support Reinforces Confidence and Brightens Market Outlook

The People’s Bank of China cut its one-year loan prime rate to 3.0% from 3.1%. In addition, it reduced the five-year loan prime rate from 3.6% to 3.5%. These benchmark rates guide corporate and residential lending conditions, including mortgages. The move aligns with broader policy efforts to stimulate the economy.

In tandem with the rate cut, several major state-owned banks lowered their deposit rates by as much as 25bps, aiming to protect margins and further incentivize lending activity.

Healthcare and Consumer Shares Lead Upside

Healthcare stocks saw strong interest, a notable example being Sunshine Guojian Pharmaceutical whose share price soared by 20% which placed it on top of the SSE. Other excellent performances helped the CSI 300 Health Care index close with gains of 1.43%. Hong Kong-listed stocks named in the Hang Seng Healthcare Index also enjoyed substantial gains that resulted in the index advancing by 2.56%.

Biopharmaceutical leader 3SBIO rallied 32.83% as investors cheered the company’s entering a licensing agreement with US pharmaceutical giant Pfizer. Other notable stocks include CSPC Pharmaceutical Group and Hansoh Pharmaceutical, which jumped by 6.06% and 5.53%, respectively.

Consumer discretionary stocks also did well, as evidenced by the 1.23% climb of the Hang Seng SCHK Consumer Discretionary Index.

Another notable stock was that of CATL, which officially debuted on the Hang Seng and saw its share price jump by over 18% above the subscription price. The company, the top manufacturer of EV batteries in China, raised $4.6 billion in total, marking 2025’s largest IPO on a global scale.