(Bloomberg) — Beaten-down Chinese shares from property developers to tech giants and casinos advanced on Thursday amid hopes that China Evergrande Group is making progress in dealing with payment deadlines.
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The Hang Seng Property Index gained as much as 5.2% while gauges of technology company stocks and Macau casino operators both climbed more than 3%. Evergrande surged as much 32%, the most in more than a decade, before paring its increase to 11% at 10:53 a.m. in Hong Kong.
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.
China high-yield dollar bonds, dominated by the property sector, also climbed, to 3 cents on the dollar Thursday morning, according to credit traders.
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 Sands China 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 rally came as Meituan climbed as much as 7.5% while Tencent Holdings advanced 4.4%.
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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