HONG KONG: China and Hong Kong stocks closed higher on Thursday, as investors concerned about the economic outlook rotated into sectors expected to benefit from government policies, with property stocks outperforming.
At the close, the Shanghai Composite index was up 0.48% at 3,509.68, recording a near 3 and a 1/2 year high.
The blue-chip CSI300 index was up 0.47%.
In Hong Kong, benchmark Hang Seng was up 0.6%, but the index tracking tech giants dropped 0.3%.
Market participants are closely monitoring any policy stimulus signals after China’s producer deflation deepened in June to its worst level in almost two years.
Real estate stocks rallied as some investors speculated on fresh stimulus, such as a potential resumption of the shantytown renovation program. Hong Kong-listed property stocks and mainland property shares jumped 4.1% and 2.6% respectively.
Longan Group surged more than 20% after the homebuilder said it has secured bondholder approval for its onshore debt restructuring plan. “Economic fundamentals could worsen visibly in H2 this year, with demand turning much weaker on multiple fronts,” Ting Lu, chief China economist at Nomura, warned in a note, adding that slowing export growth, weighed by US tariffs, and continued distress in the property sector remain key risks.
“We believe Beijing will very likely rush to roll out a new round of supportive measures at some point during H2,” he said.
Besides real estate, photovoltaic companies rose 1.7% as China vowed to curb solar overcapacity.
Heavyweight banks extended their gains to touch a record high in the morning trade. The banking sub-index finished the session up 0.9%
Shares of banking giant Industrial and Commercial Bank of China jumped 2.9%.