China stocks extend declines with bond yields hitting record lows as PBOC reportedly signals rate cuts

China stocks extended declines on Friday in a bumpy start to the new year, despite gains in the broader Asia-Pacific region, as investors assessed Beijing's policy signals.

Mainland China's benchmark CSI 300 index dropped 0.28% in a volatile session, extending declines the day before. Hong Kong's Hang Seng index rose 0.46%.

China's bond yields hit record lows with the 10-year yield dropping 1.5 basis point to 1.598%, and 30-year government bond yield down 2.9 basis points at 1.819%, according to LSEG data.

The People's Bank of China is reportedly planning to cut interest rates "at an appropriate time" this year, the Financial Times reported citing comments from the central bank. The country's 7-day reverse repo rate is currently set at 1.5%.

In the year ahead, China will expand issuance of ultra-long bonds and ramp up efforts to boost consumption, senior officials from China's National Development and Reform Commission told reporters Friday.

The officials reiterated plans to subsidize purchases of smartphones, smart watches and tablets, while increasing vocational training, pensions and support for gig economy workers.

Separately, China's commerce ministry proposed to impose export restrictions on certain technology used to make battery components and for processing critical minerals like lithium and gallium, according to a notice issued on Thursday.

Investors in Asia will continue to assess the political uncertainty in South Korea as the country's corruption watchdog failed to detain impeached President Yoon Suk Yeol after an hours-long standoff at the presidential residence, according to Yonhap News. Yoon's short-lived martial law attempt on Dec. 3 has led to a political turmoil in the country.

South Korean markets, however,