Chinese stocks boosted by Beijing’s property stimulus measures

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Chinese stocks received a boost on Monday from Beijing’s latest moves to prop up the country’s ailing property sector, in a rally that spread to Europe in early trade.

The CSI 300 index of Shanghai and Shenzhen-listed stocks advanced 1.5 per cent and Hong Kong’s Hang Seng rose 2.5 per cent, led by sharp gains for developer stocks after Beijing announced policies to allow a dozen of the country’s largest cities to reduce downpayments for homebuyers and encouraged lenders to cut interest rates on existing mortgages.

The Hang Seng Mainland Properties index advanced 8 per cent, with developers such as China Resources Land and Longfor Group up 9.7 per cent and 8.1 per cent, respectively.

The policies are designed to support China’s once-dominant property sector, which has struggled in the face of weak demand after the country reopened from three years of severe pandemic restrictions.

Shares in Chinese property developer Country Garden rose 14.6 per cent after the company gained approval from its creditors over the weekend to restructure the repayment of an almost Rmb4bn ($550mn) bond that had been set to mature on Saturday.

The easing measures also helped lift European shares. Europe’s region-wide Stoxx 600 rose 0.7 per cent, led higher by gains for real estate stocks, while France’s Cac 40 added 0.7 per cent and Germany’s Dax advanced 0.6 per cent. US markets will be closed on Monday for a holiday.

Elsewhere in Asia, Japan’s benchmark Topix rose 1 per cent, hitting its highest level in 33 years, as global markets responded to softness in US jobs data released at the end of last week.

Friday’s figures showed US unemployment rose to an 18-month high in August, putting pressure on the Federal Reserve to stop raising interest rates.

The central bank has lifted its benchmark federal funds rate to a 22-year high over the past year, as it tackles raging inflation, but noted that the possibility of further tightening would depend on economic data.

The dollar, which tends to weaken when investors expect lower rates, lost 0.1 per cent against a basket of six currencies on Monday.