Hong Kong stocks jump as Longfor, Country Garden surge after China ends freeze on equity financing by developers
- Market regulator CSRC ends a 2016 moratorium on equity financing by property developers in another move to rescue the real estate market
- Rally overshadows unease among investors over street protests against Beijing’s zero-Covid curbs
Hong Kong stocks jumped by the most in two weeks, fanned by a rally in property developers, after China’s securities regulator lifted a six-year ban on equity financing to help reverse a slump in the industry.
The Hang Seng Index climbed 5.2 per cent to 18,204.68 at the close, posting the biggest gain since November 15. The Hang Seng Tech Index soared 7.7 per cent and the Shanghai Composite Index added 2.3 per cent.
China Vanke surged 14 per cent to HK$16.56, leading industry peers. Longfor rallied 11.3 per cent to HK$23.10 and Country Garden advanced 4.5 per cent to HK$3.05. China Overseas Land and Investment advanced 7.6 per cent to HK$21.35. An index tracking mainland developers rose by 8.1 per cent with all its 10 members posting gains.
Among the mainland-traded developers, Poly Developments advanced 9.6 per cent to 17.90 yuan in Shanghai. Alibaba Group Holding led tech winners in Hong Kong, adding 9.1 per cent to HK$78.75, while Meituan climbed 11.5 per cent to HK$155.40 and Tencent added 5.9 per cent to HK$285.80.
Property developers will be allowed to raise funds from private stock sales and sell shares to fund purchases of real-estate assets, the China Securities Regulatory Commission (CSRC) said on its website on late Monday. Proceeds can be used to buy existing property projects, replenish working capital and repay debt, it said. The CSRC last froze such financing by developers in July 2016, according to Shanghai-based brokerage Shenwan Hongyuan.
“The property sector will be enjoying a loosening cycle on the policy front going forward,” said Ren He, an analyst at Guosen Securities. “More supportive policies cannot be ruled out and property stocks have a big chance of storming back.”
The MSCI China Real Estate Index, which tracks 29 developers, has crashed 55 per cent since August 2020 when Beijing introduced its “three red lines” policy to curb excessive debt among the weakest builders. The slump erased US$218 billion of market value over the period, according to Bloomberg data.
The CSRC move overshadowed unease among investors amid protests in mainland cities against Beijing’s zero-Covid measures. China earlier unveiled a 16-point support plan to ease a liquidity squeeze among private developers. A rate cut from December 5 is expected to inject US$70 billion of liquidity in the system.
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Elsewhere, China’s most valuable company Kweichow Moutai gained 5.9 per cent to 1,599 yuan in Shanghai after declaring a special dividend of 27.5 billion yuan (US$3.82 billion). The top liquor distiller also said its controlling shareholder will spend as much as 20 per cent of the dividends to boost its stake in the company.
Two stocks started trading on Tuesday. 360 DigiTech, a digital finance platform operator, rose 3.4 per cent to HK$51.75 in Hong Kong, and Shenzhen Minew Technologies, a maker of smart hardware products, fell 1.5 per cent to 9.85 yuan in Beijing.
Other major Asian markets were mixed. Japan’s Nikkei 225 slipped 0.5 per cent, while South Korea’s Kospi rose 1 per cent and Australia’s S&P/ASX 200 added 0.3 per cent.