China country-specific exchange traded funds strengthened after the People’s Bank of China executed an unexpectedly deep cut to its benchmark reference rate for mortgages in a bid to revive the ailing housing sector and support the stumbling economy.

On Friday, the iShares MSCI China ETF (NASDAQ: MCHI) rose 0.3% and the Xtrackers CSI 300 China A-Shares ETF (ASHR) gained 1.6%.

The People’s Bank of China on Friday cut its benchmark rate on loans of five years or more to 4.45% from 4.6%, the biggest single rate cut since the bank first began monitoring this market segment in 2019, the Wall Street Journal reports. In comparison, the central bank previously made a 0.1 percentage-point cut in early 2020.

The rate change was also unexpected since the central bank left another key policy rate charged on loans from a medium-term lending facility that funnels cash to commercial banks unchanged earlier this week. On Friday, the PBOC also added that it would maintain the benchmark rate for one-year loans unchanged at 3.7%.

The latest move “is an even stronger signal that instead of opting for a broad-based monetary easing they want to do more-targeted easing,” Tommy Wu, lead China economist at Oxford Economics, told the WSJ.

Senior officials have promised to combat a slowdown in the economy that has been weighed down by COVID-19 outbreaks and lockdown measures, which hindered economic activity. Market participants also hoped that Friday’s move was a response to Chinese Premier Li Keqiang’s bid to decisively increase policy adjustments and let the economy return to normal quickly, Reuters reports.

“Today’s reduction to the five-year Loan Prime Rate should help drive a revival in housing sales, which have gone from bad to worse recently,” Julian Evans-Pritchard at Capital Economics said in a note.

“But the lack of any reduction to the one-year LPR suggests that the PBOC is trying to keep easing targeted and that we shouldn’t expect large-scale stimulus of the kind that we saw in 2020.”

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