China’s Stocks Rise on Signs of Loosening Property Restrictions
China’s stocks rose, paring the benchmark index’s losses for the week, on speculation local governments are loosening property curbs to prevent economic growth from slowing further.
China Vanke Co. (000002) and Poly Real Estate Group Co., the nation’s two biggest developers, climbed at least 1.4 percent after Xinhua News Agency reported that Jinan has become the latest city to scrap home purchase limits. Anhui Jianghuai Automobile Co. (600418) led gains for automakers after the company said it will purchase all the assets of its parent. China Shipping Container Lines Co. and China Shipping Network Technology Co. rallied at least 9.8 percent after agreeing to build an e-commerce logistics platform with Alibaba China Technology Co.
The Shanghai Composite Index (SHCOMP) advanced 0.4 percent to 2,046.96 at the close. While recent data such as manufacturing show the economy is stabilizing, strategists from Bank of America Corp. and Bocom International Holdings Co. say a decline in property prices continue to pose a risk to growth.
“Relaxing restrictions on property purchasing, reintroducing discount mortgages or even further monetary easing are likely, given the importance of the property sector in the economy and its multiplier effects,” Hao Hong, the chief China strategist at Bocom, wrote in a note today. “No one is willing to be held responsible for an ugly crash of the bubble. This is one certainty amongst the many uncertainties that the market is facing.”
The CSI 300 Index (SHSZ300) added 0.2 percent to 2,148.01. The Hang Seng China Enterprises Index (HSCEI) rose 0.1 percent at 3:53 p.m. The Bloomberg China-US Equity Index retreated 0.3 percent yesterday.
The Shanghai measure slid 0.6 percent this week, the first five-day loss in three weeks. The index has fallen 3.3 percent this year on concern the slowing economy will curb earnings growth. Reports this week showed export growth missing estimates and producer prices falling at the slowest pace in more than two years. Next week’s data include first-half home sales on July 16 and June home prices on July 18.
A gauge of property developers in the Shanghai index rose 0.7 percent today. Poly Real Estate gained 2.6 percent. China Merchants Property Development Co. added 2 percent. Vanke climbed 1.4 percent in Shenzhen.
Jinan canceled home purchase limits since yesterday after implementing them for more than 3 years, Xinhua reported on its official microblog, citing the local property management bureau. Hohhot last month eased home-purchase limits, while the China Times reported last week Wuhan city will relax rules on local residents third-home purchases.
Anhui Jianghuai Automobile advanced the most since March 17. It will buy all of the assets owned by parent Anhui Jianghuai Automobile Group for 6.4 billion yuan ($1.03 billion). SAIC Motor Corp., the biggest automaker, rose 1.9 percent.
China Shipping Container Lines Co. jumped 9.8 percent to the highest close since January 2. Its Hong Kong shares rose 8 percent. China Shipping Network surged to a record high.
Alibaba and the two companies can use the e-commerce logistics information service platform to check logistics prices, track goods as well as for online settlement, according to a statement to the Shenzhen Stock Exchange.
A gauge of technology companies in the CSI 300 slipped 0.2 percent, extending losses to 5.2 percent this week, the worst among industry groups, amid concern a rally since the start of last year has been excessive given the outlook for profits.
The technology sub-index trades at 20 times 12-month projected earnings, compared with 7.6 times for the Shanghai Composite, according to data compiled by Bloomberg. Trading volumes in the Shanghai index were 22 percent above the 30-day average today.
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at firstname.lastname@example.org