Shanghai, HK stocks rise as Evergrande's stake sale plans boost property sector

SHANGHAI: Shanghai and Hong Kong shares rose on Wednesday, led by property and banking stocks, as developer China Evergrande Group's plans to sell certain assets heal confidence in Chinese real estate companies and lenders.

** The Shanghai Composite Index rose 0.3% to 3,539.48 by lunch break, though the blue-chip index CSI300 edged lower as consumer and healthcare stocks weigh.

** In Hong Kong, the Hang Seng index added 0.2%, to 26,661.04, while the Hong Kong China Enterprises Index gained 0.6% to 9,552.66.

Hong Kong shares tick up at open

** China's CSI300 Real Estate Index surged over 7%, and the Hang Seng Property Index jumped 2.7%, as China Evergrande's moves to ease its liquidity stressed soothed concerns toward the industry.

** Evergrande on Tuesday said it was in discussions with several third-party investors on proposed sales of certain assets. The stock surged over 8% in Hong Kong.

** Guosen Securities wrote in a note that despite lingering pressure on China's real estate sector, the chance of further substantial tightening becomes slimmer. Investors are seeing the light at the end of the tunnel for developers' credit issue, so valuation could be repaired, the brokerage wrote.

** Banking shares in Hong Kong and mainland China also jumped, as investors bet lenders' asset quality will improve along with developers' financial health.

** The Hang Seng Tech Index, the target of recent sell-offs due to China's tough crackdown, has stabilised over this week.

** "Despite recent turbulence, we remain constructive on the Chinese equity market over the long term," Amundi Asset Management wrote.

"Investors could take advantage of the sell-off to increase their allocation to Chinese equity in global portfolios."