China shares climbed to their highest since March on Tuesday, lifting Hong Kong markets, as investors chased an afternoon rally in property counters on hopes of improved profit margins as authorities seek to rein in land prices. The Economic Information Daily reported that the Beijing city land bureau has suspended a land transfer that attracted high bidding prices, suggesting the government is trying to stabilise the market through administrative measures.
The CSI300 of the leading Shanghai and Shenzhen A-share listings spiked 1.7 percent to 2,644.4, its highest close since March 6. The Shanghai Composite Index ended up 1.2 percent at its highest since March 25. Gains on Tuesday helped both onshore Chinese indexes decisively break out of the narrow range that has bounded their movements for almost two weeks, suggesting more gains are possible.
The Hang Seng Index rose 1.1 percent to 22,924.3, clawing back about 50 percent of losses last Thursday. The China Enterprises Index of the top Chinese listings in Hong Kong gained 1.6 percent. But turnover in Hong Kong was some 11 percent below its average in the last 20 days. Shanghai volumes were the second-best since early March, with the bulk coming in the late afternoon.
Government efforts to rein in land prices will make it cheaper for developers to acquire land, a move that could relieve pressures on their profit margins and possibly contain rising home prices in the mainland. "Containing land prices is a positive, but this is just one measure of many other supply side measures. The new central leadership is thinking structural, rather than cyclical...and now trying to figure out how best to gradually phase in these changes," said Lee Wee Liat, BNP Paribas head of Asia property research.
Premier Li Keqiang on Monday signalled a greater tolerance for a slower pace of expansion, saying China needs an average economic growth of 7 percent - compared to the 7.5 percent official target for 2013 - to reach its goal of doubling per capita gross national product by 2020. China Vanke jumped 4.8 percent in its best daily showing in more than a month in Shenzhen. China Resources Land climbed 3.2 percent in Hong Kong to near its record closing high.
The Economic Information Daily report, citing data Centanet Beijing, said Beijing has collected 61.78 billion yuan in land transfer fees so far this year, close to the 64.79 billion yuan it received for the whole of 2012, reflecting the pace of transactions. China Taiping Insurance surged 14.9 percent in its best daily gain since October 2008 after the company announced plans to buy stakes in several companies totalling $13.3 billion from its unlisted parent to streamline shareholding and capital structure, funded by proceeds from the sale of new shares priced at HK$15.39 each.
CLSA analysts said the move by Taiping's parent to increase its stake from 53.2 percent to 69 percent removes an overhang, upgrading their view on the stock from "underperform" to "buy." Chinese brokerages were also stronger after the official Shanghai Securities News reported that Haitong Securities executives pledged a greater pace of transformation of its business at the company's annual general meeting, including expanding its international operations.
Haitong jumped 4.8 percent in Shanghai and 4.7 percent in Hong Kong, also helped by an upgrade for the Chinese brokerage sector by Goldman Sachs strategists, a move that also included a downgrade for Chinese insurers. Goldman's China equity strategists said insurers could see unfavourable regulatory risks in the coming quarters and structural challenges within the sector, while reforms are likely to benefit brokers, particularly since investors are lightly positioned in the sector.
Shares of luxury watch retailer Hengdeli jumped 7.2 percent after China said it will cut import duties on Swiss watches by 60 percent over the next 10 years under a free-trade agreement which should help reinvigorate Swiss watchmakers' sales in a key market.
Comments
Comments are closed.