The property sector was firmly in focus on Wednesday, rising sharply in Shanghai on stabilising profits while Hong Kong shares hit a fresh 28-month high as developers recouped earlier losses. The Hang Seng Index recovered sharply from its losses at midday to close 1.5 percent higher led by financials, and as investors scooped up property shares hit by profit-taking after authorities announced new steps to cool prices.
Shanghai stocks hit fresh 5-month high
Confidence was high, with turnover on the day hitting HK$109 billion, nearly double the average daily turnover in 2009. Funds continued to scoop up shares of mainland Chinese banks that have sharply underperformed the broader market this year, analysts and traders said.
China Construction Bank rose 2.6 percent and was the biggest boost to the Hang Seng followed by Ping An, up 7 percent, and ICBC, up 2 percent. This year, the financials sub-index is up 0.6 percent, with most of those gains coming in the past month, compared with a 7.2 percent rise on the Hang Seng. Property stocks, which had slumped just ahead of the midday break as investors rushed to lock in recent profits, recovered most of their losses into the close. Earlier in the day, the local government announced new steps aimed at soothing concerns over stubbornly high property prices.
The property sub-index, which fell 2.2 percent at the end of the morning session, closed up 0.3 percent. Sun Hung Kai Properties, the world's largest developer by market cap, ended 0.6 percent lower. Hong Kong property prices have risen 15 percent since the start of the year, after rising by a third last year, mainly fuelled by low interest rates and purchases by wealthy mainland Chinese facing policy tightening at home.
Shares of Standard Chartered Plc fell 1.3 percent after the bank announced it plans to raise $5.3 billion through a rights issue to strengthen its balance sheet. China's key stock index hit a fresh five-month high with investors piling into shares of property developers encouraged by strong earnings and as data showing robust loan growth pointed to stable demand for real estate.
Metals and mining plays that had rallied since China's markets reopened after the Golden Week, largely to catch up with gains in commodity prices, were lower as market players rotated out of those sectors and into real estate plays. The index gained some momentum in late trade after the central bank released data showing strong lending by Chinese banks in September.
Property firms outperformed with Shanghai's volatile property sub index jumping 4.2 percent. Analysts cited solid company earnings, expectations that the strength of property controls would be moderate and a slim chance of a rise in interest rates, as key factors boosting the speculative sector. Smaller rival Poly Real Estate jumped to its 10 percent limit after it said sales for the first 9 months of the year gained 28 percent.
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