Chinese Stocks Eke Out Gain in Recovery From Monday's Rout

  • Hang Seng Index caps longest winning streak in four years
  • Guangzhou R&F Properties, Sunac China surge after deal

Mainland Chinese shares rose for a third day as they continued to recover from Monday’s selloff, while Hong Kong’s equity gauge marked its longest winning streak since 2012.

The ChiNext gauge of small-cap companies closed 0.2 percent higher, paring a gain of as much as 1.7 percent. The recovery follows a 5.1 percent plunge at the start of the week amid worries about tougher regulations and more initial public offerings. The CSI 300 Index of large-cap stocks climbed for a third day, while Hong Kong’s Hang Seng Index rose for a ninth straight session. Sunac China Holdings Ltd. soared to a record after Guangzhou R&F Properties Co. said it would pay $2.9 billion to join China’s largest property deal between the company and Dalian Wanda Group Co.

Even as the ChiNext recovers, the index hasn’t yet recouped Monday’s losses. The gauge has fallen 14 percent this year, more than any of 96 global benchmarks tracked by Bloomberg, amid rising funding costs, corporate governance issues, liquidity pressures and tougher regulatory oversight. By contrast, large caps on the mainland have climbed 13 percent this year, while the offshore-traded MSCI China Index has surged 32 percent.

"Chinese stocks’ rebound may continue after poor performance on Monday," said Sam Chi Yung, a Hong Kong-based senior strategist at South China Financial Holdings Ltd. "Economic figures have been better than expected recently and fundamentals are still good."

Data released Monday showed China’s economy grew at a faster-than-expected 6.9 percent in the second quarter from a year earlier.

The CSI 300 Index of large-cap stocks advanced 0.5 percent. The Hang Seng Index rose 0.3 percent, with AAC Technologies Holdings Inc. leading the advance with a 5.8 percent gain. The stock jumped 15 percent this week amid speculation it will report solid earnings.

  • Guangzhou R&F climbed 6.8% after saying in a joint announcement late Wednesday that it will pay $2.9 billion for some of the hotel assets that Wanda planned to sell to rival developer Sunac China. Sunac will pay 43.8 billion yuan ($6.5 billion) for a 91 percent stake in Wanda’s tourism and theme-park projects, according to the statement.
  • Sinotruk Hong Kong Ltd. jumped a record 27% after saying it expects its six-month net profit to increase more than 400% from a year earlier.
  • Chinese artificial intelligence companies jumped after the nation’s science and technology ministry was said to be close to releasing a draft plan for development of the industry. Iflytek Co. surged 8.9% and Sichuan Jiuzhou Electric Co. jumped by the 10% daily limit in Shenzhen.
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