Shares of Chinese companies listed on U.S. exchanges surged in pre-market trading on Thursday, with iQiyi Inc. seeing a notable 5.34% gain, as investors braced for a potential rate cut by China's central bank.
The rally in Chinese American Depositary Receipts (ADRs) was sparked by the U.S. Federal Reserve's decision to cut interest rates for the first time in four years on Wednesday. This move by the Fed fueled expectations that China's central bank, the People's Bank of China, would follow suit and trim its benchmark lending rates on Friday to boost the struggling Chinese economy.
According to a Reuters poll, a majority of market watchers (69%) predicted that both the one-year and five-year loan prime rates (LPRs) in China would be cut, with the current one-year rate standing at 3.35%. A potential rate cut by China could provide a much-needed boost to the country's economic growth, which has been impacted by various factors, including the lingering effects of the COVID-19 pandemic and ongoing trade tensions with the United States.
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