Wen Jiabao

Wen's pledge of support boosts mainland property stocks

Wen's comments raise investor expectations of stimulus measures to shore up the economy

PUBLISHED : Friday, 14 September, 2012, 12:00am
UPDATED : Friday, 14 September, 2012, 3:21am

Mainland property stocks surged yesterday as the premier's pledge of fiscal support on Tuesday raised investor hopes.

"There is a lot of expectation of an economic stimulus package after Premier Wen Jiabao's speech earlier this week," said Lee Wee Liat, head of property research at BNP Paribas Securities (Asia).

Wen told the World Economic Forum in Tianjin that if needed, the government would tap into its 1 trillion yuan (HK$1.23 trillion) fiscal surplus and the fiscal stability fund, worth more than 100 billion yuan, to ensure stable economic growth.

He also said there was ample room to use monetary and fiscal tools to stabilise the economy.

Lee said: "If this is the case, obviously the central government will be more accommodative to local governments' subtle easing of tightening measures on the property market."

Kenny Tang Sing-hing, general manager at AMTD Financial Planning, said capital flowed to those property stocks that had been lagging their peers. "Most of them are second-liners," he said.

Sino-Ocean Land rose 6.18 per cent to HK$3.95 while Hopson Development closed up 5.05 per cent at HK$5.41. Powerlong Real Estate gained 3.94 per cent to HK$1.32 and Poly Group added 4.29 per cent to HK$3.87. China Resources Land rose 4.49 per cent to HK$17.24 and Evergrande Real Estate ended the day 3.41 per cent higher at HK$3.03.

Credit Suisse said in a report on Tuesday that improvements in the property market had begun to attract increasing attention, with the National Bureau of Statistics' real estate index, one of the most widely reported domestic indicators on the mainland, rising for the first time this month since May 2011.

"While the improvement in the index this month has garnered the spotlight, the month-on-month change in the index may be more indicative of underlying trends. Viewed from this perspective, momentum bottomed in April and has improved steadily since then," the report said.

The jump in property stocks came two days after mainland media reported that big banks in the country had cancelled their discounts on first mortgage lending rates. Analysts expect sales growth to slow as a result.