SHANGHAI, Dec 7 (Reuters) - China stocks ended higher on
Tuesday after the central bank cut the amount of cash banks must
hold in reserve, while investors cautiously watched if
Evergrande would default as the world's most indebted developer
inches closer to a debt restructuring.
The blue-chip CSI300 index closed 0.6% firmer at
4,922.10, while the Shanghai Composite Index gained 0.2%
to 3,595.09 points.
Hong Kong shares rebounded from a 14-month low to close
higher. The Hang Seng index rose 2.7% to 23,983.66, while
the China Enterprises Index closed up 3.1% at 8,527.12
Risk appetite got a lift after the People's Bank of China
cut banks' reserve requirement ratio (RRR) on Monday, its second
such move this year, freeing up 1.2 trillion yuan ($188 billion)
in long-term liquidity to bolster slowing economic growth.
"The RRR cut is likely to boost investment sentiment and
support valuation in the stock market," said Chaoping Zhu,
Global Market Strategist at J.P. Morgan Asset Management.
"However, investors should also bear in mind that the
long-term reform goals, such as common prosperity, deleveraging
and decarbonisation, remain on the table and may continue to
weigh on the investment landscape in China," Zhu said.
On property policies, a Politburo meeting memo on Monday
dropped their previous stance of "housing is for living, not for
speculation," and said it would support the private housing
market to better meet reasonable needs.
Nomura analysts said investors should avoid
over-interpreting the memo, but added that it could be a
positive piece of news as it might correct many of these
Shares of China Evergrande Group jumped as much as
8.3% earlier in the session and closed up 1.1%, lifted by state
involvement and the prospect of a managed debt restructuring.
Some offshore bondholders of China Evergrande Group
, however, did not receive coupon payments by the end
of a 30-day grace period, pushing the cash-strapped property
developer closer to formal default.
A failure to make $82.5 million in interest payments that
were due last month would trigger cross-default on the firm's
roughly $19 billion of international bonds and put the developer
at risk of becoming China's biggest-ever defaulter.
The PBOC will also cut the rates on its relending facility
by 25 basis points to support the rural sector and small firms,
the state-run Securities Times reported on Tuesday. But the
chance of a cut in the benchmark lending rate remains low in the
near term, due to elevated PPI inflation and broadening CPI
inflation, according to Nomura analysts.
In mainland markets, real-estate developers
gained 1.5% and financials firms rose 0.9%, while
tourism stocks jumped 2.5%.
However, semiconductor firms and new-energy
shares retreated 2.6% and 1.8%, respectively, as
analysts said some investors were locking in profit on their
high valuations. The chip sector gained nearly 30% so far this
year, while new-energy sub-index climbed more than 50%.
In Hong Kong, tech giants rebounded 4.2%, tracking
gains in Wall Street, after the sector tumbled on ride-hailing
giant Didi's delisting from New York.
E-commerce giant Alibaba Group bounced from its
record low to soar 12.2%, while Tencent Holdings and
Meituan added 3.6% and 5.8%, respectively.
The jump in Alibaba, a heavweight in the China Enterprises
Index, helped the benchmark rise the most in two months.
(Reporting by Shanghai Newsroom; Editing by Jacqueline Wong and