Shanghai, Jan 20, 2026, 05:22 (GMT+8) — Premarket
- Bank of China A shares slipped 0.7%, closing at 5.36 yuan.
- China is scheduled to announce its monthly loan prime rates later Tuesday, with a Reuters poll forecasting they will remain unchanged
- Traders are grappling with sluggish growth signs, ongoing weakness in housing, and new limits imposed on ultra-fast trading
On Tuesday, all eyes will be on Bank of China Limited’s Shanghai-listed Class A shares as China gears up to announce its monthly loan prime rates. This benchmark influences the majority of new loans and mortgages.
Bank of China (601988.SS) ended Monday’s session at 5.36 yuan, slipping 0.04 yuan, or 0.74%. Changes in benchmark lending rates tend to swiftly reshape the earnings outlook for major state banks since they directly impact loan yields. (StockAnalysis)
That’s crucial now, as fresh data keeps pushing policymakers to maintain support despite regulators cracking down on speculative market areas. For bank stocks, the dilemma is well-known: lower borrowing costs can boost activity but also tighten net interest margin — the gap between what banks make and what they pay out.
A Reuters poll of 22 market participants found unanimous expectations for the one-year LPR to remain at 3.0%, with the five-year rate—used as a benchmark for mortgages—also predicted to hold steady at 3.5%. The LPR is decided monthly after commercial banks submit their quotes. The central bank has hinted at possible cuts to the reserve requirement ratio, which dictates the cash share banks must hold from deposits. (Reuters)
Mainland equities held steady Monday despite weakness in financials. The Shanghai Composite finished up 0.3% at 4,114, while banks dipped 0.6%. “Today’s economic data really wasn’t a positive surprise,” said Dickie Wong, head of research at uSmart Securities in Hong Kong, according to Reuters. (Business Recorder)
Economic growth hit a three-year low, slowing to 4.5% year-on-year in Q4, according to official data released Monday. Still, full-year growth aligned with the government’s target. Frederic Neumann, HSBC’s chief Asia economist, pointed to weak retail sales and investment as clear signs of the economy’s ongoing struggles. (Reuters)
Property woes continue to weigh on lenders. China’s new home prices slipped 0.4% month-on-month in December and dropped 2.7% compared to a year ago. Morningstar equity analyst Jeff Zhang warned the weakness will “likely remain a major drag on China’s growth” for the next two to three years. (Reuters)
Regulators are cracking down on fast trading. The securities watchdog has instructed brokerages to pull client-dedicated servers from exchange data centres, a move aimed at cutting the speed advantage of high-frequency traders—those algorithm-driven players who exploit minute price changes in milliseconds, sources told Reuters. AMP chief economist Shane Oliver said authorities want markets to prioritize “investment, as opposed to speculation.” (Reuters)
Risk appetite abroad took a hit after U.S. President Donald Trump threatened new tariffs on products from multiple European countries, pushing investors into the yen, Swiss franc, and gold. This cautious mood could spill over into Asian markets via global fund movements. (Reuters)
Bank of China’s rate call stands out as one of the rare immediate triggers that could jolt its slow-moving, high-dividend state bank shares. Investors remain alert to broader sector trends too, such as property-related credit risks and pressures from local-government financing, which often sway the major lenders in unison.
A flat LPR doesn’t tell the whole story. Should policymakers decide to cut rates more sharply down the line, margins might tighten. On the flip side, if growth falters, bad loans could climb, particularly in mortgages and small business lending.
The immediate focus is Tuesday’s LPR decision; after that, Bank of China plans to release its 2025 annual results on March 30. (Boc)
