China unleashes welcome wave of market-friendly stimulus

The Chinese Communist Party (CCP) Central Committee’s Politburo has called for powerful measures, including limiting the home supply and cutting mortgage rates, to end the free fall of home prices and meet the country’s 5% annual economic growth target.

Shares of Hong Kong-listed Chinese property developers rose on Thursday due to Beijing’s positive signals on the property markets. Longfor Group gained 28.3% to HK$11.78 (US$1.51) while Sunac China Holdings was up 26.89%. China Vanke Co Ltd surged 22.7% to HK$5.73 while China Overseas Land & Investment rose 15.7% to HK$14.32.

The property stock rally boosted the broad Hang Seng Index, which closed up 4.2% to 19,924 points on Thursday, the highest in 15 months. The Shanghai Composite Index ended up 3.6% at 3,000 points.

The Politburo meeting, held on Thursday and presided over by CCP General Secretary Xi Jinping, said that although the Chinese economy has been generally stable so far this year, it is still necessary to take a comprehensive, objective and calm view of the current economic situation, face the difficulties squarely and remain confident.

The meeting’s readout said the country should effectively implement existing policies, step up efforts to roll out incremental policies, make policy measures more targeted and effective, and strive to accomplish the targets and tasks for this year’s economic and social development.

“We should strengthen the counter-cyclical adjustment of our fiscal and monetary policies, ensure necessary fiscal expenditures, and do a good job in the ‘three guarantees” (people’s access to compulsory education, basic medical services and safe housing) at the grassroots level,” the meeting said. “We must stop the decline of property prices.”