Chinese Property Stocks Rise Amid Hopes for China Policy Easing

By Jiahui Huang

Chinese property stocks rose sharply Thursday after the Federal Reserve's half-percentage-point cut overnight and hopes for stronger stimulus to come from Beijing.

The Hang Seng Mainland Properties Index, which tracks Chinese property developers listed in Hong Kong, rose 5.1% early Thursday. The benchmark Hang Seng Index was up 1.2%.

Among top gainers, China Resources Land rose 6.7% and Longfor Group was up 6.4%. Kaisa Group and Sunac China jumped 19% and 8.7%, respectively. China Vanke rose 7.95%. Chinese developers also notched gains in mainland markets.

The gains came after the Fed kicked off its easing cycle by lowering interest rates by 50 basis points, with analysts now looking ahead to the Chinese central bank's benchmark lending rates on Friday.

The Fed's rate cut will provide more room for the People's Bank of China to cut rates without being overly concerned about yuan stability, Morningstar director of equity research Lorraine Tan said in a note.

The PBOC is expected to announce lower loan prime rates this Friday.

Further easing of monetary policy settings in China could boost sentiment, in particular after weaker-than-expected economic data for August drove some economists to cut their 2024 growth forecasts for the country.

"If domestic mortgage rate cut eventuates, this will bode well for the recovery of home transaction volume in China in the short run," Morningstar equity analyst Jeff Zhang said.

However, it may take longer to see a clear recovery for the Chinese property sector, which has been mired in a downturn for the last few years.

An ambitious rescue package unveiled in May to address the property sector's malaise hasn't been enough to offset subdued consumption sentiment and weak confidence in the economy, which continues to weigh on demand for homes in China.

"More time is needed before home demand growth turns positive, with buyers' confidence still low," Zhang added.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

September 18, 2024 23:09 ET (03:09 GMT)

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