China stocks advance in best week since July as property measures, factory report lift sentiment while typhoon hits Hong Kong market

The CSI 300 Index registered the best week since July as Beijing delivered another round of easing measures to stem a property market slump
The Caixin PMI manufacturing index climbed above 50 in August, signalling an expansion in activity

Hong Kong stock market

Zhang Shidongin Shanghai

Published: 10:45am, 1 Sep 2023

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China’s stocks rose, driving the market to its biggest weekly gain since July after Beijing prodded banks to cut down payment and mortgage rates to revive consumption, while a private report showed manufacturing expanded. Trading in Hong Kong was halted because of a typhoon.

The CSI 300 Index advanced 0.7 per cent to 3,791.25 on Friday, culminating in a 2.2 per cent gain for the week. The Shanghai Composite Index added 0.4 per cent and Shenzhen Composite Index rose 0.3 per cent.

Hong Kong’s financial markets were shut after the Observatory issued storm warning No. 8 as Typhoon Saola approached within 100km of the city and kept the alert in force throughout Friday.

China Vanke gained 3 per cent to 14.05 yuan, leading gains among developers. Seazen Holdings rallied 2.2 per cent to 14.82 yuan and Poly Developments added 1.9 per cent to 14.25 yuan. China Merchants Bank led lenders higher, jumping 2.3 per cent to 32.27 yuan. Bank of Ningbo added 5.7 per cent to 27.67 yuan and Ping An Bank climbed 1.7 per cent to 11.32 yuan.

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China lowered the minimum down payment ratio at 20 per cent for first-time homebuyers and 30 per cent for second-home purchasers, authorities said on late Thursday, while mortgage-rate cuts will be negotiated between banks and borrowers. Both measures will take effect from September 25.

Separately, the People’s Bank of China said on Friday that it will cut the foreign-currency reserve requirement ratio to 4 per cent from 6 per cent effective September 15. The move is the third since April 2022, and is seen as a way to defend the yuan from further depreciation pressure.

Beijing’s measures will foster a “more favourable environment for equity markets than the currently downbeat one,” said Redmond Wong, a strategist in Hong Kong at Saxo Markets. Light positioning and better corporate earnings suggest there is more upside in the market, he added.

Elsewhere, the Caixin PMI manufacturing index rose to 51 in August from 49.2 in July, signalling an expansion, according to a report on Friday. That contrasted with the official index earlier this week that showed a fifth month of contraction in activity in August.

Two stocks started trading for the first time. Auto parts maker Shandong Golden Empire Precision Machinery Technology jumped 122 per cent to 48.27 yuan in Shanghai, while Guangzhou Video Star Intelligence gained 23 per cent to 12.71 yuan in Beijing.

Other major Asian markets were mixed. Japan’s Nikkei 225 climbed 0.3 per cent, while South Korea’s Kospi also added 0.3 per cent and Australia’s S&P/ASX 200 lost 0.4 per cent.

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