Chinese Stocks Gain on New Restrictions on Housing Purchases
China returned to the spotlight Monday after a weeklong holiday, as shares in Shanghai rallied on hopes that Beijing's latest move to cool an overheated housing sector could renew appetite for a lackluster stock market.
Stock markets in the rest of Asia, from Sydney to Singapore, were mixed in a quiet session as both Japan and Hong Kong were closed for a holiday.
The only exception was Bangkok, where concerns about the Thai King's health spurred a heavy selloff.
The Shanghai Composite Index ended Monday's trading up 1.5%, its biggest single-day gain since Aug. 15. The Shenzhen Composite Index rose 1.9%. Chinese financial markets were closed last week for the National Day holiday.
Buoying investors' mood were recent moves by over 20 Chinese cities-including Shanghai, Beijing and Zhengzhou in central China-to impose fresh purchase restrictions on a red-hot property sector.
The new curbs, including higher mortgage down payments and quotas on apartment buying, "gives people hope that funds, which were initially headed toward real-estate investment, may flow into the stock market," said Shen Zhengyang, an analyst at Northeast Securities.
Shares in China were also likely catching up with gains last week in the closely related Hong Kong market, where the Hang Seng Index rose on Thursday to its highest level in a month.
Chinese stocks shrugged off a move by the Chinese central bank earlier Monday to set the yuan's reference exchange at a six-year low against the U.S. dollar.
The People's Bank of China set its "central parity" for the yuan at 6.7008 against the dollar, a depreciation of 0.3% from its last fixing on Sept. 30. Monday's fixing was the weakest level for the currency since September 2010.
In China's domestic foreign-exchange market, which also reopened after the weeklong closure, the dollar was trading at 6.7011 yuan.
After a weeklong trading hiatus, the onshore traded yuan has effectively just caught up with its freely traded offshore counterpart.
The weaker yuan fixing mostly reflected the dollar's global strength and was in line with market expectations, said investors.
"Whether it signals Beijing's increased willingness to let the yuan depreciate at a faster pace to help its economy remains to be seen," said a Shanghai-based head of currency trading at a Chinese bank.
The British pound also started the week off badly in Asia following Friday's flash crash, weakening 0.5% against the dollar in afternoon trading in Asia. Sterling has been under pressure during the past week on the back of tough rhetoric from the ruling Conservative party indicating that the country would seek a complete break from the European Union, abandoning its current access to the continent's markets in exchange for greater control over immigration. The GBP/USD was last down 0.4%.
Elsewhere in Asia, Australia's share index S&P/ASX 200 closed up 0.2%, while the Straits Times Index in Singapore slid 0.2%.
In Thailand, media reports saying that King Bhumibol Adulyadej was in an unstable condition following medical treatment prompted investors to dump stocks, sending the Thailand SET index down 3.2%.
The king has been hospitalized for months, shaking confidence in Thailand's markets. He is the world's longest-reigning monarch and is widely revered. Many Thailand scholars say his passing will be a source of instability in the country.
Noble Group rose 4.2% on Monday after the commodities trader said it had signed a deal valued at $1.05 billion with Calpine Corp. to sell its American energy business. Noble Americas Energy Solutions is one of Noble's most prized businesses. The firm will use the sale to cut debt.
Yifan Xie, Gregor Stuart Hunter, Jake Maxwell Watts, Saumya Vaishampayan and Saurabh Chaturvedi contributed to this article.
Write to Shen Hong at [email protected]