Asia shares gave up their earlier gains after a private Chinese manufacturing survey missed forecasts and China’s central bank surprised markets by raising its short-term lending rates.
China’s Shanghai composite fell 0.44 per cent after initially opening flat, while the Shenzhen composite was down 0.3 per cent. Meanwhile in Hong Kong, the Hang Seng index was down 0.33 per cent.
The People’s Bank of China surprised markets by hiking short-term interest rates, also known as reverse repurchase agreements (repos), by ten basis points to 2.35 per cent.
“The central bank has abandoned the benchmark deposit rate and borrowing rate as the policy interest rate tool. This, however, does not mean the start of a tightening cycle,” said Iris Pang, senior economist of greater China at Natixis, in a Friday note.