Hong Kong and China shares posted their first gains in four sessions on Monday, helped by the property sector after weaker-than-expected economic data spurred hopes that Beijing will act to stem the slowdown in the world's second-largest economy.
Two complementary surveys released separately on Saturday and Monday showed China's vast manufacturing sector has been badly hit by slowing new orders, suggesting the economic slowdown could extend into a seventh quarter. The Hang Seng Index closed up 0.4 percent at 19,559.2, while the China Enterprises Index of the top Chinese listings in Hong Kong inched up 0.1 percent.
The CSI300 Index of the top Shanghai and Shenzhen listings jumped 1.1 percent, outperforming Asian peers. The Shanghai Composite Index rose 0.6 percent. Market players said there appeared to be little fresh buying in Hong Kong, with turnover nearing 2012 lows. Volume in Shanghai rose 30 percent from Friday, but was just in line with its 20-day moving average.
"A lot of the gains today are on short covering after losses last week, which were quite overdone. Volumes are still bad, so I won't make too much out of what's going on today," said Jackson Wong, Tanrich Securities vice-president for equity sales. Shares of larger Chinese developers were among the leading gainers. Shenzhen-listed China Vanke firmed 3.4 percent, while Shanghai-listed Poly Real Estate soared 7.7 percent.
In Hong Kong, China Resources Land jumped 4.8 percent. In a report dated August 31, Citi analysts said the toughest period for Chinese developers was over, with recent first-half earnings suggesting a sales recovery was stronger than expected and balance sheets were better managed. "New tightening measures are unlikely, given heavy fiscal reliance on property market and the risks to an already slowing economy," they said in the same note, advising that investors focus on stocks of developers with a focus on key cities, good brand names and high asset turnover.
Chinese brokerages were stronger after the securities regulator allowed insurance asset management and credit guarantee firms to invest in its securities market in a bid to boost its institutional investor base. Citic Securities rose 2.9 percent in Shanghai and 2 percent in Hong Kong. Haitong Securities rose 4.6 percent in Shanghai and 2.2 percent in Hong Kong.
Strength in the Chinese alcohol sector also helped power the outperformance of onshore Chinese markets. Wuliangye was the top boost to the CSI300 Index, jumping 4.1 percent in Shenzhen. Trading in shares of premium alcohol producer Kweichow Moutai was suspended on Monday, pending an announcement from the company, it said in a filing to the Shanghai stock exchange.
This led to speculation the Moutai could be announcing an increase in product prices ahead of the week-long holiday season in early October, the start of the peak sales period for alcohol producers in China, traders said. GOME Electrial Appliances jumped 3 percent to HK$0.69 despite posting late on Friday a 501 million yuan ($79 million) first-half loss, hit by costs at its online business and the end of government subsidies on home appliances. But the company also said profitability should improve in the second half. Bank of America-Merrill Lynch analysts were among the few who upgraded the stock to "buy" while raising its target price from HK$0.68 to HK$1.10.
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