China's A-Shares Rally as LPR Rates Hold Steady for 15th Consecutive Month

China's three major A-share indices closed higher on May 20 (Thursday), following the announcement by the People's Bank of China (PBOC), authorizing the National Interbank Funding Center to release the latest Loan Prime Rate (LPR). The one-year LPR remained steady at 3.00%, while the rate for loans over five years held at 3.50%, marking the 15th consecutive month with no change.

On that day, the Shanghai Composite Index rose 0.24%, closing at 3,903.72 points; the Shenzhen Component Index gained 0.59%, ending at 13,972.78 points; and the ChiNext Index climbed 0.64%, settling at 3,495.59 points.

The seven-day reverse repo rate, a key policy interest rate, has remained unchanged since its cut in May 2025, meaning the pricing basis for the LPR remained stable this month.

The last adjustment to the LPR occurred in May 2025, when both the one-year and over-five-year LPRs were lowered by 10 basis points.

Latest data shows that in July, the weighted average interest rate for newly issued corporate loans was slightly below 3.0%, approximately 0.2 percentage points lower than the same period last year. The weighted average interest rate for newly issued personal housing loans stood at around 3.1%, roughly flat compared to the previous year.

According to a report from The Paper, industry experts noted that under the combined influence of supply and demand dynamics in the credit market, loan interest rates are trending downward—indicating that credit disbursement has been sufficiently robust to meet market needs.

The LPR is formed through a mechanism where quoting banks add a premium to the open market operation rate (the seven-day reverse repo rate), which is then calculated and published by the National Interbank Funding Center. It serves as a benchmark reference for bank lending rates. There are two LPR tenors: one-year and over-five-year.