Good property demand pushes Hong Kong and China markets up despite US rate rise fears

Hong Kong and mainland markets finished higher on Monday after property shares rose off the back of strong Chinese data and weekend real estate sales.

But trading is expected to stay quiet for the rest of the week as markets await the results of monetary policy meetings in the United States and Japan, according to traders.

The Hang Seng Index closed up 0.92 per cent, or 214.86 points, at 23,550.45 points, while the Hang Seng China Enterprises Index rose 1.58 per cent, or 152.02 points, to end the day at 9,747.75 points.

Haitong International Securities sales trader Andrew Sullivan said property shares had been boosted by “pretty strong” numbers from China, good weekend sales and an expectation that the US Federal Reserve would not raise interest rates at this week’s meeting.

The National Bureau of Statistics said on Monday that average new home prices in China’s 70 major cities climbed 9.2 per cent in August from a year earlier, picking up from a 7.9 per cent gain in July year on year.

Sunac China Holdings finished up 7.12 per cent at HK$5.87 while Legend Holdings shares closed 2.04 per cent higher to HK$20 after Legend Holdings reported that it would sell 42 of its property projects to the developer for 13.79 billion yuan.

Property development shares rose 1.24 per cent on Monday, with Sun Hung Kai Properties moving up 1.91 per cent after announcing it had sold 240 units at Grand Yoho. Wing Tai Properties released 48 additional units to the market.

“There’s still good demand on the property side both in China and Hong Kong which continues to appeal to investors,” Sullivan said.`

There was still some weakness in the Macau names following a report that found the new casinos could undermine the sector’s recovery, Sullivan told the Post.

Sands China dropped 4.59 per cent to HK$34.30 while Wynn Macau fell 1.85 per cent to HK$13.76.

Overall, the market volume was up but was not huge, showing there was “quite a bit of money sitting on the sidelines still”, he said.

“The market is now fed up with the Fed giving conflicting guidance when it was supposed to be giving clear policy guidance.”

Ben Kwong Man-bun, a director of KGI Asia, said the recent property sales were “quite upbeat,” but he cautioned that the focus in Hong Kong will remain on the potential for a US interest rate rise later this week. Markets will also be focused on the outcome of the Bank of Japan’s monetary policy meeting this week.

“The future interest rate movement by the Fed will be the major concern for those property company investors because they’re very interest rate sensitive,” Kwong said.

He said it was difficult to say what the outcome of these two central bank meetings would be, but added that the uncertainty would keep investors on the sidelines.

Traders anticipate a relatively low likelihood of a US policy rate change, with only 12 per cent believing the Fed will announce a change to the status quo at its two-day monthly policy board meeting, which gets underway on Wednesday, according to CME Group.

For Japan’s policy, “expectations are all over the place”, said Frederic Neumann, co-head of Asian economic research for HSBC.

“A sober look, however, suggests that the Bank of Japan is at best going to tinker with its existing framework, not introduce a major overhaul.”

On the mainland, markets opened higher after the four-day mid-Autumn Festival holiday. The Shanghai Composite Index rose 0.77 per cent, or 23.2 points, to close at 3,026.05 points while the CSI 300 was up 0.75 per cent at 3,263.12 points.

The Shenzhen Composite Index gained 1.06 per cent, or 21.04 points, to 2,001.29 while the Nasdaq-style ChiNext was up 0.96 per cent, or 20.65 points, to 2,165.21.

Elsewhere in Asian trading on Monday, South Korea’s Kospi closed up 0.82 per cent while the Sydney All Ordinaries dropped 0.06 per cent.

All three major US indices closed lower on Friday with the Dow Jones Industrial Average finishing 0.49 per cent down at 18,123.8 and the S&P 500 losing 0.38 per cent to 2,139.16. Meanwhile, the Nasdaq Composite ended down 0.1 per cent at 5,244.57 points.

The downbeat mood on Wall Street capped a volatile week ahead of the Fed’s meeting this week. The Chicago Board Options Exchange Volatility Index, a leading measure of market expectations, showed short-term investor anxiety at the highest levels in almost two months.

While the US markets gave up ground, oil prices notched gains, as October West Texas Intermediate crude was up 1.84 per cent to US$43.82 a barrel on the New York Mercantile Exchange. November Brent crude LCOX6 on London’s ICE Futures exchange rose 1.68 per cent to US$46.54 a barrel.