Chinese stocks rise on monetary easing; The misfortunes of Evergrande in focus

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SHANGHAI, Dec. 7 (Reuters) – Chinese stocks closed higher on Tuesday after the central bank cut the amount of liquidity banks must hold in reserve, while investors cautiously watched whether Evergrande defaulted as the developer most indebted in the world was approaching a debt restructuring.

The blue-chip CSI300 index (.CSI300) closed 0.6% higher at 4,922.10, while the Shanghai Composite Index (.SSEC) gained 0.2% to 3,595.09 points .

Hong Kong stocks rebounded from a 14-month low to close higher. The Hang Seng Index (.HSI) rose 2.7% to 23,983.66, while the Chinese Enterprise Index (.HSCE) closed up 3.1% at 8,527.12 points.

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Risk appetite increased after the People’s Bank of China lowered banks’ reserve requirement ratio (RRR) on Monday, its second such move this year, freeing up 1.2 trillion yuan ($ 188 billion ) long-term liquidity to support slowing economic growth. Read more

“The decline in the RRR is likely to boost investment sentiment and support the valuation of the stock market,” said Chaoping Zhu, global markets strategist at JP Morgan Asset Management.

“However, investors should also keep in mind that long-term reform goals, such as common prosperity, deleveraging and decarbonization, remain on the table and may continue to weigh on the investment landscape in China.” , Zhu said.

On real estate policies, a Politburo Monday meeting memo abandoned its previous position that “housing is for living, not for speculation,” and said it would support the private housing market to better meet needs reasonable.

Nomura analysts said investors should avoid overinterpreting the memo, but added that it could be positive news as it could correct many of those brakes that are skewing the market.

Shares of China Evergrande Group (3333.HK) jumped 8.3% earlier in the session and closed 1.1% higher, supported by state involvement and the prospect of restructuring managed debt. Read more

Some offshore bondholders of the China Evergrande Group (3333.HK), however, did not receive a coupon payment at the end of a 30-day grace period, pushing the real estate developer to run out of cash more. close to a formal defect. Read more

A default of $ 82.5 million in interest owed last month would trigger a cross-default on the company’s roughly $ 19 billion in international bonds and put the developer at risk of becoming the world’s largest default from China.

The PBOC will also cut rates on its 25 basis point repayment facility to support the rural sector and small businesses, the state-run Securities Times reported on Tuesday. But the likelihood of a cut in the benchmark interest rate remains low in the near term, due to high PPI inflation and widening CPI inflation, analysts at Nomura say. Read more

In mainland markets, real estate developers (.CSI000952) gained 1.5% and financial corporations (.CSIFN) rose 0.9%, while tourism values ​​(.CSI930633) jumped 2.5% %.

However, semiconductor companies (.CSIH30184) and new energy stocks (.CSI399808) fell 2.6% and 1.8%, respectively, as analysts said some investors were locking in profits on their high valuations. The chip sector has gained nearly 30% so far this year, while the new energy sub-index has climbed more than 50%.

In Hong Kong, tech giants (.HSTECH) rebounded 4.2%, following Wall Street gains, after the industry slumped following the delisting of ridesharing giant Didi (DIDI.N) from New York.

E-commerce giant Alibaba Group (9988.HK) rebounded from its all-time low to hit 12.2%, while Tencent Holdings (0700.HK) and Meituan (3690.HK) rose 3.6% respectively and 5.8%.

The surge from Alibaba, a heavyweight in the Chinese Business Index (.HSCE), helped the benchmark rise the most in two months.

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Report from the Shanghai press room; Editing by Jacqueline Wong and Sherry Jacob-Phillips

Our standards: Thomson Reuters Trust Principles.


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