Shanghai, Jan 18, 2026, 04:47 CST — Market closed
- Bank of China A shares ended Friday 0.6% lower, closing at 5.40 yuan
- Starting Jan. 19, China will implement stricter margin-finance regulations alongside selective rate reductions
- Traders are focused on China’s Q4 GDP and the upcoming Loan Prime Rate fix this week
Bank of China’s A shares on the Shanghai exchange slipped on Friday, finishing roughly 0.6% lower at 5.40 yuan. The stock fell below its previous close of 5.43 yuan, with mainland markets closed for the weekend. (Investing)
The coming sessions are crucial as Beijing attempts to rein in a rapidly climbing stock market without stifling it completely. For major state lenders like Bank of China, this tug-of-war plays out in credit demand, funding costs, and investor risk appetite.
Two policy currents collide: regulators clamp down on leverage in equities, even as the central bank pushes targeted easing to bolster select sectors. Bank stocks often find themselves caught in between, seen as both gauges of policy shifts and reliable dividend bets.
Regulators announced late this week that starting Jan. 19, exchanges will raise the minimum margin on new loans from 80% to 100%. The move is part of a broader push to clamp down on excessive speculation. (Reuters)
The People’s Bank of China announced it will trim rates on select sector-specific policy tools by 25 basis points starting Jan. 19. It also plans to boost relending quotas targeting tech and small businesses, but held off on any broad benchmark rate cuts for the time being. (Reuters)
Credit appetite remains soft. China’s new bank loans totaled 16.27 trillion yuan in 2025, marking the smallest annual tally since 2018, despite December lending surpassing expectations, according to a Reuters report. This keeps pressure on policymakers to maintain support. (Reuters)
This week promises a slew of key data for lenders and investors alike. S&P Global Market Intelligence economists Chris Williamson and Jingyi Pan highlighted that China’s mainland GDP report for Q4 lands Monday, paired with December activity numbers. They also pointed to Tuesday’s Loan Prime Rate (LPR) decision. (S&P Global)
The LPR, a benchmark lending rate updated monthly by a panel of banks, can ease the burden on borrowers when it drops. But if deposit rates don’t follow suit, banks could face tighter interest margins.
Bank of China and its major state rivals — ICBC, China Construction Bank, and Agricultural Bank of China — remain in focus as investors gauge how policy backing might impact asset quality, especially amid ongoing property-related strains in some sectors of the economy.
Yet the week could swing in the opposite direction. A more pronounced slowdown in GDP or activity figures might reignite concerns over loan growth and bad-debt risks. At the same time, stricter limits on margin financing could sap liquidity from the wider market and weigh on sentiment.
Attention shifts to Monday’s mainland GDP and activity data, along with the Jan. 19 rollout of the new margin rule and anticipated PBOC rate cuts, all before Tuesday’s Loan Prime Rate fix. (S&P Global)
