China stock market

Vanke shares hit record highs in Shenzhen and Hong Kong as housing sales remain among country’s few areas of growth

Stock surges 6.3pc to its highest close since listing in 1991 in Shenzhen. Its Hong Kong shares gain 2.9pc, to another milestone high

PUBLISHED : Friday, 15 September, 2017, 12:42pm
UPDATED : Friday, 15 September, 2017, 4:53pm

Shares in China Vanke, the nation’s biggest property developer by market value, hit records highs in both mainland and Hong Kong trading on Friday, after official government data showed housing sales and investment remained among the country’s few areas of growth acceleration in August.

The stock surged 6.3 per cent to 29.30 yuan (US$4.48) in Shenzhen, its highest close since its listing in 1991, with trading volumes surging to more than two times its 100-day average. Its Hong Kong-listed shares gained 2.9 per cent to HK$28.40, again closing at a record.

Other developers also rose. A wider gauge tracking real-estate stocks under the benchmark Shanghai Composite Index added 1.5 per cent, the highest level in almost two months.

Traders have been snapping up property stocks as home sales were the one of the few bright spots in a slew of official economic data on August released by the nation’s statistics bureau on Thursday.

While industrial output, fixed-asset investment and retail sales all trailed analysts’ projections, growth in property sales and investment accelerated, thanks to strong sentiment in the third- and fourth-tier cities.

Home sales rose 4.3 per cent from a year earlier last month, compared with a 2 per cent increase in July, and growth in real-estate investment picked up to 7.8 per cent from 5.8 per cent a month earlier, according to figures from brokerage Shenwan Hongyuan.

It recommends buying shares in industry leaders such as Vanke, China Merchants Shekou Industrial Zone Holdings and Poly Real Estate, adding ongoing industry consolidation and a rebound in home sales will benefit the majors with more capital and larger land reserves.

Vanke’s mainland-listed shares are now valued at 12.5 times estimated earnings for this year, 24 per cent cheaper than the industry average, according to Bloomberg data.

Projections for China’s home sales this autumn now stand a real chance of being revised up, as investors were previously over-pessimistic about the sales outlook.