The Hong Kong share market surged to a 20-month high on Wednesday as the rally ignited by last week’s stimulus measures from Beijing continued to lift Chinese stocks. Can this momentum sustain big gains today and tomorrow?
The closure of mainland Chinese markets for the Golden Week holiday has facilitated foreign buying in the Hong Kong market. We observed this on Wednesday, with all focus on Hong Kong, which saw trading resume after a day's break for China’s National Day.
The Hang Seng Index jumped 6.2%, bringing the gain over the past six days since last Tuesday to more than 18%. In fact, the Hang Seng is up more than 26% in the past month, marking a dramatic surge.
The primary driver has been the property sector—both local and mainland. The Hang Seng Mainland Properties Index surged by nearly 15%, resulting in a massive gain of 53% since Tuesday, September 25, and over 64% in the last month.
The real estate sector was the biggest gainer of the day, with local property groups rising and sending the Hang Seng Property Development and Management Index up by 19% on Wednesday. This is the highest the index has been since August 2023.
The most significant gains came from mainland property groups—just 10 days ago, they were struggling to stay afloat, but now their shares are surging. Longfor Group Holdings saw its shares leap by more than 25%, China Vanke’s shares surged nearly 40% to their highest level in 14 months, while shares in Kaisa Group soared nearly 41%.
Adding to the momentum from monetary policy easing and other support measures were moves by local governments to ease or lift restrictions on property ownership and transactions—restrictions imposed a couple of years ago by President Xi Jinping and his administration.
Guangzhou’s city government lifted all restrictions on home purchases effective Monday. Shanghai’s reduction of the required tax-paying period also took effect on Tuesday, and Shenzhen has relaxed purchasing restrictions, allowing buyers to purchase one additional apartment in select districts.
While these measures will help stabilize the property market, lifting prices and reviving demand remains a significant challenge, as Morgan Stanley pointed out in a note published Wednesday.
“The continued drag from the property sector will leave a sizable shortfall in demand, keeping growth below target,” the investment bank’s Asia-Pacific economists wrote.
In Singapore, SGX iron ore futures managed a small gain on a day of mostly positive trading. The price of 62% Fe fines edged up 0.8% from Tuesday, ending at $108.95, a rise of 91 cents on the day.
