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Other losers from PBOC actions
The PBOC did more than cut key lending rates to stimulate China's economy. It also finally removed the regulatory cap on the deposit rates banks can offer savers. This means that alternative money market funds no longer enjoy an advantage over conventional bank providers.
“It's well known that Baidu and Alibaba (along with others like Tencent) have substantial money market operations inside China. Similarly, it's well known that the uptake of these products has been driven by the pitifully low interest rates savers get at banks in that country. Today [October 23] the Chinese government announced its latest changes in interest rates, including the statement that they will now lift that regulatory cap on the interest rates that bank accounts can offer. This is obviously bad news for the strategic advantages of those money market funds,” writes Forbes’s Tim Worstall.
Photo: keso s