Reserve ratio cut to boost lending to developers

The unexpectedly large cut in banks' required reserve ratio announced on Sunday will put more money into the market and ease developers' borrowing costs, giving a big boost to the flagging real estate sector, analysts said.

The one percentage point reduction to 18.5 percent by the People's Bank of China, the central bank, was twice the usual adjustment. Analysts estimated that it will allow banks to boost lending by unleashing about 1.2 trillion yuan ($194 billion).

Investors agreed, with shares of property developers rallying on Monday and the Shanghai Property Index rising 1.2 percent for the best performance among five industry groups, even as the Shanghai Composite Index dipped 1.64 percent.