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ASIA: Chinese Equities Surge Higher, Homebuying Restrictions Further Eased

ASIA
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  • Chinese equities have surged again this morning, property shares experienced a significant rally, with a Bloomberg gauge rising up to 14% after Shanghai, Shenzhen, and Guangzhou eased homebuying restrictions as part of the government's efforts to stabilize the struggling real estate sector. This follows the announcement of a major stimulus package aimed at addressing the prolonged property slump, with top leaders committing to halt the market's decline.
  • Guangzhou became the first tier-1 city to remove all homebuyer eligibility checks, while Shanghai and Shenzhen reduced minimum down payment ratios for first and second homes to 15% and 20%, respectively. The central bank's decision to allow mortgage refinancing is expected to lower borrowing costs for millions of families, potentially reducing interest expenses by approximately $21 billion.
  • Many Chinese equity benchmarks are now in bull market territory with the CSI 300 up another 4%, and now 22.5% off the September lows, while the Mainland Property Index is up 40% over the past 5 session and 6.50% higher today and the HSTech Index is up 3.20%.
  • Earlier, China's factory activity contracted for the fifth consecutive month in September, with the manufacturing PMI coming in at 49.8 although slightly better than economists' expectations of 49.4. The sector remains in contraction, reflecting sluggish demand and continued declines in market prices for manufacturing, despite a modest improvement in raw material costs. Non-manufacturing activity in construction and services also weakened, falling to 50 from 50.3 in August.
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  • Chinese equities have surged again this morning, property shares experienced a significant rally, with a Bloomberg gauge rising up to 14% after Shanghai, Shenzhen, and Guangzhou eased homebuying restrictions as part of the government's efforts to stabilize the struggling real estate sector. This follows the announcement of a major stimulus package aimed at addressing the prolonged property slump, with top leaders committing to halt the market's decline.
  • Guangzhou became the first tier-1 city to remove all homebuyer eligibility checks, while Shanghai and Shenzhen reduced minimum down payment ratios for first and second homes to 15% and 20%, respectively. The central bank's decision to allow mortgage refinancing is expected to lower borrowing costs for millions of families, potentially reducing interest expenses by approximately $21 billion.
  • Many Chinese equity benchmarks are now in bull market territory with the CSI 300 up another 4%, and now 22.5% off the September lows, while the Mainland Property Index is up 40% over the past 5 session and 6.50% higher today and the HSTech Index is up 3.20%.
  • Earlier, China's factory activity contracted for the fifth consecutive month in September, with the manufacturing PMI coming in at 49.8 although slightly better than economists' expectations of 49.4. The sector remains in contraction, reflecting sluggish demand and continued declines in market prices for manufacturing, despite a modest improvement in raw material costs. Non-manufacturing activity in construction and services also weakened, falling to 50 from 50.3 in August.