Chinese property, tech stocks jump on hope of softer regulations

[HONG KONG] Shares in Chinese property developers booked their best 2-day gain in 6 years, joined by a jump in technology stocks, as investors speculated Beijing may soften regulatory crackdowns on the 2 industries.

Confidence in the property sector has been lifted by a spate of positive news this week that has raised expectations the government may be relaxing restrictions on how developers raise funds. Short sellers unwinding bearish bets added fuel to the rally. Evergrande's bond interest payment, which looks set to help the firm to again avert a default, also gave investors some reprieve.

A Bloomberg gauge of developer shares jumped 5.6 per cent, extending a 2-day advance to 12 per cent, the most since July 2015. Sunac China Holdings surged 8.4 per cent in Hong Kong while China Evergrande Group advanced 6.8 per cent. China Merchants Shekou Industrial Zone Holdings and Gemdale were among the top performers on the CSI 300 Index on Thursday.

"Everything is policy-driven these days, you never know when the regulations will tighten again," said Castor Pang, head of research at Core Pacific-Yamaichi International Hong Kong Ltd. "If there's a lack of positive policy catalysts in the future, we'll easily see a reversal in the stock rallies."

Optimism spread to technology shares after Reuters reported that Didi Global is preparing to re-introduce its apps in China by the end of the year as regulators wrap up investigations into the ride-hailing company.

The Hang Seng Tech Index erased an earlier loss to rally 1.8 per cent. Kuaishou Technology jumped, while Tencent Holdings pared losses to 1.2 per cent after disappointing third-quarter results.

Dow Jones said China's central bank is considering easing rules to help developers sell assets to avoid defaults, after a similar report by local media Cailian. On Wednesday, the state-run Securities Times reported that rules for developers to issue domestic bonds may be loosened. If the changes are well implemented, the risk of a hard landing for property market in China could be avoided, CGS-CIMB analysts including Raymond Cheng wrote in a note.

BLOOMBERG