(Bloomberg) — Beaten-down Chinese shares from property developers to tech giants and casinos advanced on Thursday as worries that a spread of China Evergrande Group’s debt woes to the broader market ebbed.
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The Hang Seng Property Index gained 4.6%, the most since Nov. 10, while gauges of technology company stocks and Macau casino operators both climbed at least 0.9%. China Evergrande surged 18%, the most in a year.
Investors are closing watching an Evergrande bond interest payment due Thursday after the company said a day earlier it had “resolved” a payment for an onshore note. Meanwhile, Chinese authorities have begun laying the groundwork for a debt restructuring, which would greatly reduce the risk of contagion from an uncontrolled collapse of the developer.
“The markets are now pricing in Evergrande’s debt crisis is likely to be ring-fenced within the property sector and not spill over to the wider financial system,” said Kelvin Wong, an analyst at CMC Markets (Singapore) Pte.
Liquidity injections by China’s central bank coupled with the resumption of the stock connect program have allowed mainland investors to buy Hong Kong shares “in search of deep discounts,” which is also lifting markets, said Bloomberg Intelligence analyst Marvin Chen.
Adding to relief in markets, U.S. shares took in their stride the prospect of a reduction in Federal Reserve stimulus as early as November, which flowed through into Asian equities.
The jump in gaming shares was led by SJM Holdings Ltd. and Wynn Macau Ltd. A record rout last week that followed proposed revisions to local laws wiped out nearly $20 billion in market value.
The Hang Seng Tech Index’s advance came as Meituan gained 5.2% while Tencent Holdings rallied 2.9%.
Holidays this week across much of Asia have contributed to volatility. Mainland China’s equities markets were closed Monday and Tuesday while Hong Kong was closed Wednesday.
(Updates throughout)
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