China promises more support to boost ‘tortuous’ economic recovery
By Juliana Liu, CNN
Hong Kong (CNN) — China’s top leadership has vowed to do more to support a “tortuous” economic recovery, which has lost steam after an initial burst of activity early in the year.
The assurances, made by the Communist Party’s 24-member Politburo — a top decision making body — boosted stocks in China-related companies on Tuesday. Shares in China’s property developers, currently mired in the industry’s worst slump on record, have soared in response.
In Hong Kong, the Hang Seng Mainland Properties Index was 11% higher. Shares in Country Garden, China’s biggest developer by sales last year, were more than 14% higher. Real estate firms Longfor Group and Sunac China Holdings gained more than 20% and 14% respectively.
The property rally helped Hong Kong’s benchmark Hang Seng index to trade 3% higher, after ending the previous trading session in the red. An index of the top 300 stocks traded on the Shanghai and Shenzhen stock exchanges was 2.6% higher.
According to a report issued late Monday to state media, the world’s second largest economy will make policy adjustments to spur domestic consumption, help private businesses and bolster the struggling property sector. It did not offer much detail.
China’s leaders agreed that “the current economic operation was facing new difficulties and challenges, mainly due to insufficient domestic demand, difficulties in operating some enterprises, many hidden risks in key areas, and complex and severe external environment,” it said.
They added at a meeting chaired by leader Xi Jinping that the current economic recovery was making “tortuous” progress.
Some investors had been hoping Beijing would offer more concrete stimulus measures following the gathering of the country’s most senior officials.
Stephen Innes, managing partner at SPI Asset Management, said the stronger wording of the report suggested the leadership was serious about making more decisive policy actions.
“Investors now believe the Politburo meeting sets an encouraging tone for more substantial and comprehensive policy easing down the road,” he wrote in a research note.
“Why is it different this time? Because the lawmakers acknowledged the problem. And to fix any problem, you must acknowledge there is a problem,” Innes wrote.
Last week, official data showed economic recovery in China continued to lose momentum in the April to June months, prompting urgent calls for more help from the central government.
The-CNN-Wire
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