More Xi Jinping Put: After Another Stock Market Rout, China's PBOC Slashed Bank Reserve Ratio Today!

For the optimists, crashing Chinese stocks have little relevance to their economy because it is "small" and has largely been dominated by retail participants or by individuals.

Nevertheless, Chinese stocks tumbled anew today, from Bloomberg:

Chinese stocks fell, with the benchmark index approaching the lowest level since November 2014, as some investors were disappointed by a lack of specific measures to boost growth during the Group of 20 meetings in Shanghai.

The Shanghai Composite Index dropped as much as 4.6 percent. The measure has declined 24 percent this year, the worst performer among 93 global equity indexes, on concern capital outflows will accelerate and earnings deteriorate as the economic slowdown deepens. The yuan capped its longest losing streak this year.

Investors had hoped the government would announce measures to bolster the economy over the weekend, according to JK Life Insurance Co., after People’s Bank of China Governor Zhou Xiaochuan said on Friday there is room for more easing. There are also increasing signs funds are shifting from equities to housing, according to Steve Wang, chief China economist at Reorient Financial Markets Ltd....

The Shanghai Composite declined 2.9 percent to 2,687.98 at the close as an index of 50-day price swings reached its highest level since November. The equity gauge fell 1.8 percent in February, extending January’s 23 percent plunge. The Hang Seng China Enterprises Index slid 1.5 percent, capping a fourth straight monthly decline. The Hang Seng Index lost 1.3 percent.

Apparently, Chinese stock have been too small to affect the economy to have spurred the Xi Jinping Put. And with today's quasi stock market meltdown, the Chinese government via the PBOC, added more to the stock market rescue...

From Bloomberg:

China’s central bank stepped up efforts to cushion its economic slowdown amid plunging stock prices and a weakening currency, cutting the amount of cash the nation’s lenders must lock away.

The required reserve ratio will drop by 0.5 percentage points effective March 1, the People’s Bank of China said on its website Monday. That will take the level to 17 percent for the biggest banks, still one of the highest such ratios in the world. The move marks a return to more traditional easing after the central bank indicated it would spur growth by guiding interbank markets lower and injecting liquidity through open-market operations.

The PBOC has been trying to restore stability to the nation’s currency after outflows hit a record pace in recent months. Reductions to the required reserve ratio -- which will allow banks to lend more -- help compensate for the departure of money. The central bank said it lowered the RRR rate to guide stable and appropriate growth in credit and create appropriate monetary and financial conditions for supply-side structural reform, according to a statement on its website.

Chinese stocks have been too small, ironically, for their authorities to throw everything but the bathroom sink to save them