Hong Kong stocks set for winning week on China policy easing bets while Evergrande payment eases bond default concerns

On Oct 22, 2021 7

A worker walks in front of an electronic board showing the Hang Seng Index in Central, Hong Kong. Photo: AP

Stock benchmark is set for a fourth week of advance on optimism about China easing measures to support domestic housing market
Evergrande default concerns ease as developer is said to have paid interest to offshore bondholders before Saturday’s deadline

Hong Kong stocks were headed for the biggest winning week in eight months as property developers surged on China policy easing bets. Evergrande jumped on media reports that it has paid interest to offshore bondholders.

The Hang Seng Index rose 0.4 per cent to 26,132.90 at the local noon break, adding to a four-week rally. The gauge has risen 3.2 per cent this week, the most since the five-day to February 5. The Hang Seng Tech Index has risen 7 per cent since last Friday, set for its biggest jump in eight weeks. The Shanghai Composite Index was little changed.

Longfor Group rose 6.2 per cent, while China Resources Land added 4.9 per cent. China Overseas Land and Investment jumped more than 2.9 per cent. Sunac China Holdings rose 7.6 per cent.

The China Banking and Insurance Regulatory Commission said on Thursday that authorities will support first-time homebuyers and banks will start easing mortgage financing, following a report showing home prices shrank last month for the first time in six years. It however pledged to retain the broader curbs on sector leverage.

Stocks also benefited from easing concerns about property debt default after China Evergrande was said to have paid US$83.5 million of interest to offshore bondholders before a 30-day grace period expires on Saturday, the state-run mainland newspaper Securities Times reported. Reuters also reported the same.

Traders were seen loading up property stocks from Thursday after a mainland media report said two state-owned lenders were speeding up loans for developers and mortgages for homebuyers.

China Evergrande rose 3.5 per cent while its Evergrande Property Services Group gained 4 per cent. They advanced despite a simmering dispute with Hopson Development over the failed US$2.6 billion asset deal between the two groups.

Sinocat Environmental Technology declined 6.1 per cent to 66.58 yuan on its first day of trading in Shanghai.

Author: Iris Ouyang, SCMP