Should China's investors be expected to cheer an interest rate cut or not?
Going by popular belief, a stock market rally is the norm. But going by an analysis of the People's Bank of China's previous easing efforts, it's about 50-50, writes Peter Wells. (But those are pretty much the odds as to whether Chinese shares will be up or down on any day, aren't they.)
Something that is a little clearer, though, is that the PBoC's rate cuts in this cycle have generally been cheered by investors. The interest rate cut at the weekend to a record low 4.85 per cent is the sixth since easing cycle began in July 2012. In the sessions that have followed those rate cuts, the Shanghai Composite has risen four times out of five, and the average performance is a 1.2 per cent gain (see table).