Investing.com -- Chinese property stocks rebounded sharply from recent losses on Tuesday, aided chiefly by promises of more economic support for the ailing sector from top policymakers.
China’s Politburo - the top decision-making body of the Communist Party - said on Monday it will roll out more spending measures in the coming weeks to support economic growth.
The measures will be aimed primarily at boosting domestic spending, and will also involve adjusting property policies to support the sector. While the Politburo did not outline any definite measures, investors were still cheered by what appeared to be a change in tone for the Chinese government.
The promise of more stimulus comes on the heels of a sharp slowdown in economic growth, with the Chinese economy barely expanding in the second quarter. Chinese stocks were sold off en masse following the data, and were trading at steep discounts to their Asian peers.
This also attracted an element of bargain buying into Chinese shares, with the embattled property sector being a key target of this trade.
Hong Kong-listed Country Garden Holdings Company Ltd (HK:2007) and Longfor Properties Co Ltd (HK:0960) rose 14% and over 20%, respectively. Sunac China Holdings Ltd (HK:1918) added 14%, while KWG Living Group Holdings Ltd (HK:3913) rallied nearly 17%.
Tuesday’s rally marks a recovery in major property stocks, after concerns over a brewing debt crisis in the sector triggered steep losses in the past two sessions. Country Garden - one of China’s biggest property firms - was in particular hit hard by doubts over its ability to meet debt commitments, which brewed concerns over a cascade of defaults in the sector.
China’s property sector, which is a key economic engine for the country, was battered by a mix of restrictive policies and weak pandemic-era sales over the last three years. While the country reversed its stance on funding sources for property developers, and also scaled back most anti-COVID restrictions this year, the sector has still seen little signs of a recovery.
Broader Chinese stocks also rallied on Tuesday. The Hang Seng index surged 3.6%, while the Shanghai Shenzhen CSI 300 and Shanghai Composite indexes rose 2.6% and 1.9%, respectively.