(Bloomberg) – Defeated Chinese stocks, from real estate developers to tech giants to casinos, advanced Thursday amid hopes that China Evergrande Group is making progress in handling payment terms.
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The Hang Seng property index gained as much as 5.2%, while the indicators for the shares of technology companies and Macau casino operators rose more than 3%. Evergrande rose as much as 32%, the most in more than a decade, before cutting its rise to 11% at 10:53 a.m. in Hong Kong.
Investors are closing in on the interest payment on an Evergrande bond that matures Thursday after the company said a day earlier that it had “settled” a payment for an onshore note. Meanwhile, the Chinese authorities have started laying the groundwork for a debt restructuring, which would greatly reduce the risk of contagion from an uncontrolled developer collapse.
“Markets are now pricing in the Evergrande debt crisis, it is likely to be bounded within the real estate sector and not spill over into the broader financial system,” said Kelvin Wong, analyst at CMC Markets (Singapore) Pte.
Liquidity injections from China’s central bank coupled with the resumption of the stock connect program have allowed mainland Chinese investors to buy Hong Kong stocks “in search of deep discounts,” which is also lifting markets, the analyst said. Bloomberg Intelligence Marvin Chen.
China’s high-yield dollar bonds, dominated by the real estate sector, also rose to 3 cents on the dollar Thursday morning, according to credit traders.
Adding relief in the markets, US equities took in stride the prospect of a reduction in stimulus from the Federal Reserve as early as November, which flowed into Asian equities.
The jump in gaming stocks was led by Sands China Ltd. and Wynn Macau Ltd. A record loss last week that followed proposed revisions to local laws wiped out nearly $ 20 billion in market value.
The Hang Seng Tech index rally came as Meituan rose as much as 7.5%, while Tencent Holdings advanced 4.4%.
This week’s holidays in much of Asia have contributed to the volatility. Mainland China’s equity markets were closed on Monday and Tuesday, while Hong Kong was closed on Wednesday.
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