International News 22 May 2025
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China cuts interest rates to save economy from trade war onslaught
The People's Bank of China (PBOC) has reduced its benchmark lending prime rate (LPR) for the first time since October, lowering the one-year LPR by 10 basis points to 3.0% and the five-year LPR to 3.5%. This move is intended to stimulate the slowing economy amidst trade tensions with the U.S., and will also boost consumption and credit growth while safeguarding the profitability of commercial banks. Additionally, major state-owned banks such as ICBC and the Agricultural Bank of China have also reduced deposit rates to maintain net interest margins in the face of economic challenges. The policy is designed to encourage smaller banks to make similar adjustments. The stock market reacted favourably to the interest rate reduction, with the CSI banking sector index increasing as a result, indicating that investors welcomed the easing measures.
Australia's central bank cuts interest rates to 2-year low
The Reserve Bank of Australia (RBA) has reduced its benchmark interest rate by 25 basis points to 3.85%, the lowest level in two years, due to a global economic slowdown and an easing of domestic inflation. This decision followed a two-day policy meeting, during which projections indicated a total easing of 57 basis points by the end of 2025. Following the announcement, the Australian dollar experienced a depreciation, while bond yields increased. Despite stable consumer inflation and falling core inflation, the RBA remains cautious about the economic outlook amid diminished risks of rising inflation and global pressures. While the rate cut slightly eases monetary policy, some experts, such as Sean Langcake of Oxford Economics Australia, believe that monetary conditions remain tight and expect two more cuts in the future.
Battery Giant CATL Shares Rise 12.5% on Hong Kong Exchange Debut, Raise US$4.6 Billion
China's leading electric vehicle battery manufacturer, CATL, saw its shares surge by 12.5% on their Hong Kong trading debut after raising $4.6 billion in the largest IPO globally this year. The offer price of HK$263 per share rose to HK$296, showcasing strong investor demand with the institutional portion oversubscribed by 15.2 times and the retail portion by 151 times. CATL's Founder and Chairman, Robin Zeng, highlighted the listing as a significant step into the global capital markets, with the aim of promoting a zero-carbon economy. CATL had initially aimed for a $4 billion raise but increased it due to heightened investor interest. The green shoe option could potentially raise IPO funds to $5.3 billion, positioning it as the second-largest IPO in Hong Kong since Kuaishou Technology in 2021.