SHANGHAI: Hong Kong shares marked their biggest percentage gain in six weeks and China stocks rose after regulators stepped up efforts to encourage lenders to extend loans to qualified real estate projects after a widening mortgage-payment boycott on unfinished houses.
Sentiment was also boosted by the governor of the country’s central bank vowing to increase the implementation of prudent monetary policy to support the real economy.
The blue-chip CSI300 index rose 1% to 4,292.59 on Monday, while the Shanghai Composite Index gained 1.6% to 3,278.10 points.
The Hang Seng index rose 2.7% to 20,846.18, while the China Enterprises Index gained 3% to 7,168.89 points.
Mainland-listed real estate developers rose 3.3% and banks added 1.4%, while HK-listed mainland developers jumped 3.7%.
New real estate loans in June were expected at more than 150 billion yuan ($22.23 billion), compared with a contraction in May, state television CCTV reported on Monday.
Asian equity markets rose, following a much-needed bounce on Wall Street, though nerves were stretched ahead of a near-certain interest rate hike in Europe.
Chinese central bank Governor Yi Gang also said China’s economy is facing downward pressure due to COVID-19 and external shocks.
Meanwhile, the state-owned Securities Times said China’s monetary policy has ample room and sufficient tools, including further cutting banks’ reserve requirements, to cope with new challenges amid a shaky economic recovery.
China’s economy grew just 0.4% in the second quarter from the same period last year. While June data showed signs of improvement, analysts do not expect a rapid recovery due to the zero-COVID policy, an indebted property sector and a dim global outlook.
Several large Chinese cities, including Shanghai, are on their toes due to new outbreaks of COVID-19 infections, rolling out repeated mass testing or extending lockdowns.
China’s central bank stepped up cash injections through open market operations on Monday, offering 12 billion yuan via seven-day reverse repurchase agreement, snapping a 10-day streak of a minimal 3 billion yuan ($444.61 million) of daily offering.
Financials shares rose 2% and energy soared more than 4%.
Tech giants listed in Hong Kong gained 3%, with food-delivery giant Meituan up nearly 6%.