China stocks jump to seven-month high on policy optimism; Hong Kong up

A man reads a newspaper in front of an electronic board at a brokerage house in Beijing

SHANGHAI (Reuters) – China stocks jumped to a seven-month high on Monday morning, led by property and financial shares, as investors intensified their bets that disappointing economic data for July would prod Beijing to unleash fresh stimulus.

Hong Kong shares rose to a fresh nine-month high, as depressed global interest rates pushed some investors to hunt for yields in emerging market equities.

By the lunch break, China’s blue-chip CSI300 index <.CSI300> rose 3.2 percent, to 3,398.67 points, while the Shanghai Composite Index <.SSEC> gained 2.4 percent, to 3,122.30 points.

China published weaker-than-expected investment, lending, retail spending and factory output data on Friday. That followed a run of poor numbers this month, keeping alive hopes the government will unleash more stimulus this year to meet ambitious economic growth targets.

“In light of persistent headwinds from the external sector, weak business sentiment, and a cooling property market, we believe that policymakers need to accelerate policy easing and reforms,” Jing Li, an economist at HSBC, wrote in a note.

Huatai Securities pointed out that the recent rally in blue-chips was driven by yield-hungry investors in a low-interest environment, rather than the result of rising risk appetite.

Real estate stocks <.CSI300REI> continued to surge following days of strong gains, with bellwether Vanke <000002.SZ> jumping its 10 percent daily limit.

An index tracking the sector jumped more than 7 percent to a seven-month high.

The banking sector <.CSI300BI> also jumped on easing hopes, while brokerage shares <.CSI399707> posted robust gains on expectation China will launch the Shenzhen-Hong Kong Stock Connect soon.

In Hong Kong, the Hang Seng index <.HSI> added 0.7 percent, to 22,930.74 points, while the Hong Kong China Enterprises Index <.HSCE> gained 1.6 percent, to 9,707.34.

Most sectors rose, with financial <.HSCIF> and IT stocks <.HSCIIT> leading the gains.

(Reporting by Samuel Shen and Pete Sweeney; Editing by Jacqueline Wong)