Hong Kong stocks snap three-day drop as China think tank recommends stronger stimulus amid housing market slump, weak retail sales

  • Hang Seng rebounds from a three-day slide as investors bet China will ease policy to shore up growth
  • Home prices in 70 mainland Chinese cities slipped more than estimated in November, while gain in retail sales trailed consensus forecast

Hong Kong stocks gained on speculation China will further ease policies to support economic growth after official reports showed new home prices fell by the most in nearly seven years and while retail sales struggled.

The Hang Seng Index rose 0.2 per cent to 23,684.94 at the local noon trading break. The Tech Index declined 0.5 per cent while China’s Shanghai Composite Index was little changed.

Alibaba Group Holding, the owner of this newspaper, gained 3.4 per cent while its health information unit climbed 0.2 per cent. A gauge tracking property developers rose 1 per cent after suffering the biggest drop in three months on Tuesday. China Resources Land advanced 2.6 per cent, while Country Garden rose 1.9 per cent.

Policy easing bets is giving stocks a slight boost, said Will Shum, portfolio management director in Hong Kong at iFast Financial. The People’s Bank of China “will probably do something” before the Lunar New Year on February 1, he added, following a cut in banks’ reserve ratio on December 15.

Prices for new homes across 70 of China’s biggest cities fell for the third month, declining by 0.33 per cent in November from October, the statistics bureau said. It was biggest pullback since February 2015. Retail sales grew 3.9 per cent, missing the consensus for a 4.7 per cent gain by economists tracked by Bloomberg.

The PBOC should lower interest rates and boost infrastructure investment to ensure the economy will grow by at least 5 per cent next year, according to research fellows at China Finance 40 Forum, a Beijing-based think tank whose members include deputy governor Chen Yulu and head of the bank’s monetary policy department Sun Guofeng.

Four firms started trading for the first time on mainland bourses. Biotech company BeiGene crashed 12.8 per cent while furniture manufacturer Mengtian Home Group surged 43 per cent. Jewellery producer DR Corporation jumped 43 per cent and Guangzhou Huayan Precision Machinery soared 87 per cent.

Elsewhere, major Asia-Pacific markers were mixed. Australian equities retreated 0.6 per cent, while stocks in South Korea fell 0.2 per cent. The Japanese gauge inched up 0.1 per cent.

Author: Cheryl Heng, SCMP

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