Hong Kong stocks rebound amid report on plan to waive tax on home purchases, target for ending quarantine rules

  • Hong Kong mulls scrapping stamp duty on home purchases by mainland Chinese buyers, sees end of quarantine in November as desirable target, Bloomberg reports
  • Sporadic lockdowns in China have dissipated all of the stock gains from Shanghai reopening in June, leaving market bulls frustrated

Hong Kong stocks approached a two-week high after shares of developers surged on report the city is considering waiving a tax on home purchases by mainland Chinese buyers to help rejuvenate the economy.

The Hang Seng Index jumped 0.9 per cent to 20,228.71 at the local noon trading break, overturning an earlier drop of as much as 0.9 per cent. The Tech Index gained 0.6 per cent, while the Shanghai Composite Index added 0.3 per cent.

The Hang Seng Property Index strengthened 1.8 per cent, the most in two weeks. New World Development advanced 6.1 per cent to HK$27.70 and Sun Hung Kai Properties rallied 3.9 per cent to HK$97.35. Henderson Land added 3.6 per cent to HK$28.75 while Country Garden appreciated 1.6 per cent to HK$2.57.

Apart from potential removal of double stamp duty, the government also deems scrapping hotel quarantine by November as a desirable target, Bloomberg reported on Tuesday, citing an interview with Regina Ip, convenor of the Executive Council.

Hong Kong’s economy contracted 1.4 per cent last quarter from a year earlier, after shrinking by more than expected 4 per cent in the preceding three months. The threat of recession has plagued the city amid border restrictions and anti-pandemic measures that have punished stock, property and aviation markets.

In Hong Kong, the city’s business chambers and travel industry leaders have called for authorities to fully reopen the economy to the rest of the world, after measures this week to ease mandatory hotel quarantine rules.

“While we expected a relaxation in the city’s border control, the final plan came as a disappointment to us,” said Daiwa Capital Markets analysts Charlotte Man and Kevin Lai in a Monday note. “This may also have a chain effect on the city’s private consumption expenditure.”

China’s lockdown hits top duty-free retailer for US$2.7 billion as stock slides in Shanghai, hurts Hong Kong IPO appeal

Before today’s turnaround, Chinese stocks in onshore and Hong Kong stock exchanges have failed to kick on since the June reopening of Shanghai. Sporadic lockdowns in cities including Macau and southern Hainan province have upset economic forecasts and earnings recovery outlook, with the MSCI China Index losing all of its gains in July and August pullback.

Elsewhere, the US government is due to report July inflation data on Wednesday, which could set the tone on future rate hikes. Prices rose by the most in four decades in June, and the Federal Reserve has raised its Fed fund target four times this year in the lift-off.

China will also report inflation data Wednesday, with consumer prices expected to increase by 2.9 per cent in July, according to consensus estimates from economists polled by Reuters. That’s close to Beijing’s annual target of about 3 per cent, potentially limiting room for monetary easing.

Wuxi Taclink Optoelectronics Technology jumped 29 per cent to 62.81 yuan in Shanghai on its first day of trading. Elsewhere, Asian markets were mixed, with Japanese shares losing 0.8 per cent, while Australian and South Korean stocks added 0.1 per cent.

Author: Cheryl Heng, SCMP

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