China H-Shares Cap 3-Week High on Property, Stimulus Bets

Chinese stocks traded in Hong Kong closed at a three-week high amid speculation the government will take further steps to shore up the property market and support economic growth.

China Overseas Land & Investment Ltd., the biggest mainland developer listed in Hong Kong, advanced 4.1 percent after the central bank asked lenders to expedite mortgages. Anhui Conch Cement Co., the No. 1 mainland producer of the building material, added 2.3 percent in Hong Kong. Bank of China Ltd., the nation’s fourth-biggest bank by market value, rose 1.7 percent. China Molybdenum Co. slumped 5.4 percent in Shanghai after rallying 27 percent over the past week.

The Hang Seng China Enterprises Index, also known as the H-share index, added 1.4 percent to 9,991.61, the highest close since April 22. The gauge extended gains amid speculation the People’s Bank of China may cut lenders’ reserve-requirement ratios to counter slowing growth, according to Dragon Life Insurance Co.

“There are expectations that some of the softer macroeconomic data out of China will prompt some stimulus,” said Daphne Roth, the Singapore-based head of Asian equity research at ABN Amro Private Banking, which oversees about $207 billion.

The PBOC yesterday told the nation’s 15 biggest lenders to accelerate the granting of mortgages, prioritizing first-time buyers while monitoring credit risks. With developers holding off on new construction, Premier Li Keqiang is seeking to put a floor under the economic slowdown. Home sales fell 18 percent in April from the previous month, according to the National Bureau of Statistics.

Developers Surge

Measures of property companies led gains on the Hang Seng Indexand Hang Seng Composite Index. China Overseas Land rose 4.1 percent to HK$19.84. China Resources Land Ltd., the second-biggest mainland developer listed in Hong Kong by market value, added 6 percent to HK$16.02. Building-materials supplier Anhui Conch climbed 2.3 percent to HK$29.05.

Hong Kong’s benchmark Hang Seng Index rose 1 percent to 22,582.77, and the Shanghai Composite Index slid 0.1 percent to 2,047.91.

After soaring the most in two years on Nov. 18 as China unveiled its biggest policy changes since the 1990s, the H-share index dropped 13 percent through yesterday as factory production and new credit slowed. The gauge traded at 6.9 times estimated earnings today, compared with 10.5 for the Hang Seng Index, 8 for the Shanghai Composite and 16.1 for the Standard & Poor’s 500 Index yesterday.

The central bank’s order isn’t enough to turn around the property market and more loosening measures may be announced such as a cut in banks’ reserve-requirement ratios in the second quarter, Nomura Holdings Inc. wrote in a report.

Reserve Ratio

The reduction “may not come immediately, but probably next month,” said Wu Kan, a fund manager at Shanghai-based Dragon Life. “Besides weak economic data, money-market rates and commercial banks’ purchases of foreign currencies are also among what the central bank takes into consideration.”

Bank of China added 1.7 percent to HK$3.49. The lender said it’s seeking to raise as much as 100 billion yuan ($16 billion) selling preferred stock in China and offshore, becoming the latest mainland company to issue the securities domestically since the government began allowing them to two months ago.

Tencent Holdings Ltd. gained 1.3 percent to HK$514. Analysts surveyed by Bloomberg expect first-quarter net income at Asia’s biggest Internet company to rise to 4.9 billion yuan from 4 billion yuan a year earlier.

China Molybdenum dropped 5.4 percent to 6.77 yuan in Shanghai, retreating from its biggest two-day gain on record on May 12.

Futures on the S&P 500 dropped 0.1 percent after the underlying index extended its record high yesterday.

— With assistance by Kana Nishizawa, Shidong Zhang, and Anna Kitanaka

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