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Chinese stocks jumped after the nation rolled out further property support measures, the latest in an intensifying campaign to rescue the beleaguered sector that’s been dragging down the economy.
The Hang Seng China Enterprises Index gained as much as 3.6%, with property names Longfor Group Holdings Ltd and China Resources Land Ltd leading the advance. A Bloomberg Intelligence gauge of developer shares surged more than 8%. The CSI 300 Index of onshore China shares closed up 1.5% to add to its gains on Friday, when Hong Kong’s stock market was shut due to a typhoon.
China is taking bigger steps to showcase its policy determination after a slew of piecemeal measures to support the housing market failed to halt a slide. The latest changes included lowering the minimum down payment and easing mortgage restrictions for some homebuyers at mega-cities including Beijing. Home sales soared in the biggest cities following the relaxation of mortgage rules, according to several local media reports.
“We believe this will trigger a short-term rebound in sales among all tier-1 cities, as this unlocks some previously suppressed upgrade demand,” JPMorgan Chase & Co analysts including Karl Chan wrote in a note. While momentum can cool afterwards, “this easing can still at least stabilise sentiment, which is an essential first step in avoiding further deterioration,” they said.
In Beijing, more than 1,800 units of new homes were sold on September 2 alone, more than half of the 3,100 homes in August, according to Centaline property agency analyst Zhang Dawei. Some new housing projects in Shanghai recorded the same number of transactions in just one day as they had during the previous month, according to a separate report in The Paper.
Hopes are building that Chinese stocks are set for a more sustainable rebound after the HSCEI gauge languished as one of the world’s worst-performing indexes in August. Beijing has been rolling out new stimulus measures on an almost daily basis over the past two weeks, including the first reduction since 2008 in the stamp duty for stock trades.
While not enough to dispel deeper worries over China’s structural economic slowdown, the measures have nonetheless helped lift sentiment.