Last week, the People's Bank of China (PBOC) lowered its benchmark lending and deposit rates by 25 basis points, bringing the one-year lending rate down to 5.35% from 5.60% and the one-year deposit rate down to 2.50% from 2.75%. This rate cut was the second one since November.
BlackRock said it sees equity markets becoming more volatile as the country takes further measures.
“Chinese equity markets are likely to become more volatile in coming months, with share prices buffeted between further loosening expectations and weakening fundamentals. However, we believe policymakers still have a wide range of policy tools at their disposal.”
In view of this, the fund house said it is continuing to assess its exposure to Chinese financial sector.
“We have taken profit on some large positions, including banks, although we remain constructive over the medium term.”
Speaking at the opening of the country's annual parliamentary meeting on Thursday, Premier Li Keqiang set the country’s annual GDP growth target to roughly 7%, which, if met, would be the lowest growth rate for the country over the past 24 years.
China's economy had 7.4% economic growth last year.
Li also said the country will implement proactive fiscal and monetary actions to sustain economic growth.