Evergrande, mainland developers boost Hong Kong stocks, with benchmark index closing higher for a third straight day

·4-min read

Hong Kong stocks rose for a third straight day, boosted by mainland property developers after China Evergrande Group skirted bond default yet again.

The Hang Seng Index gained 1 per cent to 25,247.99 at the close on Thursday, after losing as much as 0.5 per cent earlier. The Hang Seng Tech Index rose 1.8 cent despite a decline in bellwether Tencent. China’s Shanghai Composite Index and the CSI300, which tracks the largest companies in Shanghai and Shenzhen, gained at least 1.2 per cent.

The embattled Evergrande avoided another default as it made interest payments on three dollar bonds, jumping 6.8 per cent. China Resources Land was among the biggest gainers, adding 5.6 per cent to HK$33.30, while Longfor Group and Country Garden Holdings advanced at least 5.1 per cent.

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“Thanks to news of Evergrande repaying its overdue coupons, the Chinese property sector made a strong rebound,” said Will Shum, portfolio management director at iFast Financial in Hong Kong. “Ping An Insurance also benefits given its huge exposure on equity investments in the property sector.” Ping An Insurance gained 3.8 per cent.

Investors have been keeping tabs on China’s strained real estate industry ever since Evergrande’s liquidity crunch started roiling financial markets in the past few months, dampening confidence in the sector. Traders were relieved on Thursday as the developer averted default and signs of easing in China’s property sector emerged.

The Hang Seng Mainland Property Index jumped for a second day, adding 5.6 per cent on reports that Chinese policymakers could ease controls on property developers to sell bonds in the interbank market. China had introduced the “three red lines” policy in August last year to curb debts in the real estate sector.

Fantasia’s shares sink after developer defaults on bond payment

Stocks fell in the first trading session as Tencent Holdings, the second largest constituent, proved to be a drag. It declined as much as 3.5 per cent, before paring losses to 1.2 per cent. The WeChat operator on Wednesday posted its slowest quarterly growth in two years amid Beijing’s regulatory crackdown on Big Tech. Tencent’s net profit rose 3 per cent year on year in the June to September quarter.

“While it [profit growth] was very slow, considering the challenges it faced in the third quarter amid the regulatory crackdown, the positive growth meant investors overreacted previously, so its stock rebounded,” said Shum.

Bond coupon payment deadlines for China Evergrande

Date

Amount (US$m)

Type

Maturity date

Sep 23, 2021

17.9

Onshore

September 2025

Sep 23, 2021

83.5

Offshore

March 2022

Sep 29, 2021

45.2

Offshore

March 2024

Oct 11, 2021

68.9

Offshore

April 2022

Oct 11, 2021

42.5

Offshore

April 2023

Oct 11, 2021

36.8

Offshore

April 2024

Oct 19, 2021

9.4

Onshore

October 2025

Oct 24, 2021

115

Offshore

October 2022

Oct 24, 2021

120

Offshore

October 2023

Oct 27, 2021

44.4

Onshore

April 2026

Nov 6, 2021

41.9

Offshore

November 2022

Nov 6, 2021

40.6

Offshore

November 2023

Nov 6, 2021

72.7

Onshore

May 2023

Nov 6, 2021

26.3

Onshore

May 2024

Nov 26, 2021

18.3

Onshore

May 2023

Dec 5, 2021

10.8

Onshore

June 2023

Dec 28, 2021

50.4

Offshore

June 2023

Dec 28, 2021

204.8

Offshore

June 2025

Jan 22, 2022

57.5

Offshore

January 2023

Jan 22, 2022

60

Offshore

January 2024

Jan 7, 2022

44.3

Onshore

July 2022

Jan 8, 2022

24.3

Onshore

January 2023

Source: Evergrande, SCMP Research

Two stocks made their debut on the mainland exchanges. Zhejiang Oceanking Development, a chemicals manufacturer and distributor, gained 44 per cent to 8.63 yuan. Shandong Linuo Technical Glass, which produces and sells pharmaceutical glass packaging, surged 109 per cent to 27.12 yuan.

Other major gauges in Asia were mixed. Stocks in South Korea and Australia each retreated 0.2 and 0.6 per cent respectively, while the Japanese benchmark gained 0.6 per cent. US stock markets closed lower overnight on higher-than-expected inflation figures.

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