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The last action of PBOC took place at the end of a week of vacation in China. When Chinese markets were closed last week, Hong Kong shares fell for four consecutive days, as investors became increasingly concerned about the impact of the trade war. Experts expected sales to be reflected in the Shanghai and Shenzhen stock markets as they reopened on Monday.
But the reduction of the RRR hardly calmed the nerves when the stock markets of Greater China stumbled at the beginning of the week. Shares in Shanghai and Shenzhen fell by almost 3% on Monday morning, while shares in Hong Kong fell by almost 1%.
"China is a little worried, there are so many difficulties now and I think it's just right to prepare for the worst and wait for the best," said Gareth Nicholson, Head of Titles at fixed income at the Bank of Singapore, in CNBC Monday.
But Nicholson said if the trade situation deteriorated further, China would have several levers to save its economy because President Xi Jinping had "political capital".
"I mean President Xi, if you think about it, he does not have to worry about another election in six months, twelve months, eighteen months." He has this stability if he needs to reopen the faucets, he does not need to worry about saying "it takes too much away from the budget, too much debt," added Nicholson.
"It can worry about debt problems in three, four or five years," Nicholson said.
– Evelyn Cheng of CNBC contributed to this report.
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