China stocks jump to seven-month high on policy optimism; Hong Kong up

EghtesadOnline: China stocks jumped to a seven-month high on Monday morning, led by property and financial shares, as investors intensified their bets that disappointing economic data for July would prod Beijing to unleash fresh stimulus.

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15 August 2016

According to Reuters, Hong Kong shares rose to a fresh nine-month high, as depressed global interest rates pushed some investors to hunt for yields in emerging market equities.

By the lunch break, China's blue-chip CSI300 index .CSI300 rose 3.2 percent, to 3,398.67 points, while the Shanghai Composite Index .SSEC gained 2.4 percent, to 3,122.30 points.

China published weaker-than-expected investment, lending, retail spending and factory output data on Friday. That followed a run of poor numbers this month, keeping alive hopes the government will unleash more stimulus this year to meet ambitious economic growth targets.

"In light of persistent headwinds from the external sector, weak business sentiment, and a cooling property market, we believe that policymakers need to accelerate policy easing and reforms," Jing Li, an economist at HSBC, wrote in a note.

Huatai Securities pointed out that the recent rally in blue-chips was driven by yield-hungry investors in a low-interest environment, rather than the result of rising risk appetite.

Real estate stocks .CSI300REI continued to surge following days of strong gains, with bellwether Vanke (000002.SZ) jumping its 10 percent daily limit.

An index tracking the sector jumped more than 7 percent to a seven-month high.

The banking sector .CSI300BI also jumped on easing hopes, while brokerage shares .CSI399707 posted robust gains on expectation China will launch the Shenzhen-Hong Kong Stock Connect soon.

In Hong Kong, the Hang Seng index .HSI added 0.7 percent, to 22,930.74 points, while the Hong Kong China Enterprises Index .HSCE gained 1.6 percent, to 9,707.34.

Most sectors rose, with financial .HSCIF and IT stocks .HSCIIT leading the gains.