(Bloomberg) -- Chinese financial stocks surged Friday as Premier Li Keqiang visited the nation's biggest banks and pledged more support for the economy.
Li met staff at Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., and Bank of China Ltd. offices in Beijing, according to a government statement. He said China will strengthen the scale of its counter-cyclical adjustments of macro policies and further cut taxes. Li also urged banks to take full advantage of tools including reserve ratio cuts, and to support private and small businesses' financing needs, the government said.
Hours later, after the market shut, the central bank cut the amount of cash lenders must hold as reserves by 1 percentage point. The move is expected to release about 1.5 trillion yuan ($218 billion) of cash into the economy and lower banks' annual interest payments by 20 billion yuan as it helps replace costlier funding.
The steps are policy makers' latest efforts to spur decelerating growth in the world's second-largest economy. China is increasing measures to help small and private firms get better access to funding. The central bank tweaked a policy on Wednesday to allow more banks become eligible for targeted reserve ratio cuts and in November regulators set targets for fresh loans to private companies. The non-state sector contributes about 60 percent of the nation's gross domestic product.
Read more: A QuickTake on China's moves to press banks to lend more
The Shanghai Composite index rose 2.1 percent, the biggest gain in a month, led by banks and brokerages. ICBC, the world's largest lender by assets, gained 1.4 percent, while CCB rose 1.6 percent. A Bloomberg index of China-listed brokerages rose 7.9 percent, the biggest advance since October.
To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net;Heng Xie in Beijing at hxie34@bloomberg.net;Yinan Zhao in Beijing at yzhao300@bloomberg.net
To contact the editors responsible for this story: Sam Mamudi at smamudi@bloomberg.net, Jeanette Rodrigues
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With assistance from Bloomberg
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