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China: Stocks bolt to fresh 7-year highs as Beijing eases property curbs

[HONGKONG] China stocks rose to fresh seven-year highs on Tuesday, led by property and banking stocks, after Beijing eased mortgage lending policies to bolster the struggling real estate market and reduce its drag on the cooling economy.

The CSI300 index rose 0.9 per cent, while the Shanghai Composite Index gained 0.3 per cent.

The CSI300 Real Estate Index, advanced 0.8 per cent, after surging 7 per cent on Monday, its biggest daily rise this year.

Hong Kong's benchmark Hang Seng index rose 0.4 percent on China's latest easing move, touching one-year-highs, with Hong Kong-listed Chinese companies rising sharply on signs of fresh money inflows from mainland.

The People's Bank of China (PBOC) said on Monday after the market close that commercial banks can now lower their minimum downpayment requirement for buyers of second homes, and with outstanding mortgages, to 40 per cent from 60 per cent previously.

Separately, the Ministry of Finance said that individuals selling an ordinary house were exempt from business taxes if they had owned it for more than two years, compared with at least five years previously.

Speculation that measures were imminent had driven share prices higher on Monday afternoon, though analysts said a glut of unsold homes was likely to continue to weigh on prices for much of the year. "We expect the new policies would have limited stimulus affect on property sales," Haitong Securities said in a research report on Tuesday.

"However, in the backdrop of the current stock market bullishness, the policies would accelerate the pace of money flowing into stocks." China banking stocks also rose sharply, as investors bet a healthier real estate market would improve lenders' profitability and reduce the risk of more bad loans.

In Hong Kong, the Hong Kong China Enterprises Index, which tracks Chinese companies listed in Hong Kong in the form of so-called "H shares", extended Monday's gains to hit its highest level in nearly four years.

Traders cited signs of fresh money inflows from China after Chinese regulators last weekend said they would allow mainland mutual funds to invest in Hong Kong shares via the Shanghai-Hong Kong Stock Connect scheme.

On Monday, turnover in Hong Kong stock trading by mainland investors under the Connect scheme reached a record high since its launch on Nov 17 at HK$5,593 million.