HSBC on recent China policy support, reason to tentatively buy mainland & Hong Kong stocks

Chinese authorities announced a number of policy measures aimed at support for the property sector during May including:

lowering down payment requirements

300 bn RMB (yuan) in a relending programme for local governments to acquire properties and convert them into social housing

national floor for mortgage interest rates will be removed

The IMF upgraded their view on China also:

• The IMF has upgraded China’s economic growth target to 5%, from 4.6%
• IMF Deputy Managing Director sees scope for more policy to address China property sector
• More from IMF on China: Fiscal policy needs to reorient further to domestic consumption

HSBC, in brief, say that the supportive policy measures are enough encouragement for some investors to ‘dip their toe’ into Chinese stocks, both mainland and Hong Kong listed. HSBC say further reason to buy is found in low valuations.

Chinese stocks have had a rip since February:

• Chinese companies buy back shares, lift dividends – driving rally

Here’s the chart from that post:

This article was written by Eamonn Sheridan at www.forexlive.com.