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Shanghai - Chinese stocks in Hong Kong rallied, rebounding from the biggest quarterly loss in four years, as trading resumed after a holiday and the government stepped up targeted support for the economy.
The Hang Seng China Enterprises Index advanced 3.2% to 9 708.89 at 07:56, heading for its biggest gain in three weeks. The gauge tumbled 28% last quarter.
China Resources Land jumped 8% after the People’s Bank of China reduced the minimum home down payment for first- time buyers, while automakers climbed for a second day after authorities cut a tax on passenger-vehicle purchases.
Casino operators surged on a report China is studying supportive measures for Macau to revive the city’s economy.
Chinese policy makers are increasing targeted stimulus after five interest-rate reductions since November failed to reverse an economic slowdown.
The decline in the property down- payment requirement was the first in five years, while the support measures for the auto industry follow five straight months of declining sales.
The nation’s growth will slow to 6.8% this year, below the government’s goal of 7%, according to the median of economist estimates compiled by Bloomberg.
Short covering
“China is likely to roll out new policies in the fourth quarter,” said Hao Hong, chief China strategist at Bocom International Holdings in Hong Kong.
“We are looking for more fiscal stimulus, such as favourable tax treatment and industry-specific policies on property, auto, new energy and environmental protection. A short covering rally such as today will be strong but brief and difficult to trade. The rally tends to fizzle out once shorts have covered their position.”
The Hang Seng Index added 2.6%. Hong Kong’s financial markets were closed on Thursday, while mainland markets will remain shut until October 8 for National Day holidays.
Data yesterday showed China’s official factory gauge stabilised around a three-year low in September. The reading remaining below the usual level for the month shows "relatively weak domestic and external demand," according to a statement released by government statisticians.
Property measures
Anhui Conch Cement jumped 7.3% and Dalian Wanda Commercial Properties headed for its biggest gain in five weeks. The PBoC cut the minimum down payment for buyers in cities without purchase restrictions to 25% from 30%, according to a statement released on its website on Wednesday.
The previous requirement had been in place since 2010, when the government boosted the ratio from 20% to help curb property speculation.
“Sentiment was heartened by measures to support the property market,” said Castor Pang, head of research at Core- Pacific Yamaichi Hong Kong. “We may see more measures coming in this quarter for the government to meet the 7% growth target.
If index heavyweights such as properties and finance shares move, the market may stage some rebound from here. H shares have hit a bottom.”
Automakers soar
Great Wall Motor soared 16%, heading for the biggest two-day advance in about seven years. Geely Automobile Holdings climbed 4.9%.
China cut the purchase tax on vehicles with engines 1.6 litres or smaller by half to 5% effective October 1 through the end of next year, according to the State Council, or cabinet. The directive also forbade local governments from restricting the purchase and operation of electric vehicles and reiterated support for promoting new-energy vehicles and battery development.
Galaxy Entertainment Group surged 9.6% to lead gains by Macau casino operators. China is studying measures to help revive the city’s economy, Macao Daily reported, citing Li Gang, director of the Chinese government’s local liaison office.
Gross gambling revenue in the former Portuguese colony decreased 33% to $2.2bn in the city last month, narrowing from August’s 35.5% drop, data from Macau’s Gaming Inspection and Coordination Bureau showed. The latest decline was in line with the estimates from nine analysts surveyed by Bloomberg.
Consumer-related stocks also rallied. Haier Electronics Group surged 10%, poised for its its biggest gain since July 9. Gome Electrical Appliances Holding climbed 10%.
