China's top leadership has pledged to do more to support a "tumultuous" economic recovery, which has lost momentum after a strong start to the year.
The 24 members of the Communist Party's Politburo, a top decision-making body, provided the assurances, which bolstered China-related equities on Tuesday.
China Pledges Economic Support
In response, shares of China's property developers, which are presently experiencing the industry's worst decline on record, have increased.
The Hang Seng Mainland Properties Index increased by 11% in Hong Kong. The shares of Country Garden, the largest developer in China by sales last year, increased by more than 14%. Longfor Group and Sunac China Holdings, both real estate companies, posted gains in excess of 20% and 14%, respectively.
After concluding the previous trading session in the red, the Hong Kong benchmark Hang Seng index traded 3% higher due to the property market rally. An index comprised of the top 300 equities traded on the Shanghai and Shenzhen stock exchanges increased by 2.6%, according to CNN.
According to a report released to state media late on Monday, the world's second-largest economy will modify its policies to stimulate domestic consumption, assist private businesses, and bolster the struggling real estate market. It was lacking in detail.
During a meeting presided over by the leader Xi Jinping, they added that the present economic recovery was making "tortuous" progress. Following the meeting of the country's highest-ranking officials, some investors had hoped Beijing would propose more concrete stimulus measures.
Stephen Innes, managing partner at SPI Asset Management, opined that the report's forceful language indicated that the leadership was intent on taking more decisive policy actions.
The Politburo, the highest decision-making authority of the ruling Communist Party, stated that the property sector must respond to the new situation brought on by significant changes in market supply and demand and optimize property policies in a timely fashion.
While few details of the support measures were provided, investors focused on a particular shift in tone, which they believed indicated that additional property stabilization measures were imminent.
Chinese Leaders Say Economy Faces Difficulties
In recent weeks, investors were wary of a worsening debt crisis in the real estate industry, as new symptoms of trouble arose among state-backed property developers Sino-Ocean Group and Greenland Holdings, and property giants Country Garden and Dalian Wanda Group, as per Reuters.
The Communist Party's highest decision-making body, chaired by President Xi Jinping, said it would implement a "counter cyclical" policy and primarily adhere to a prudent monetary policy and proactive fiscal policy, according to a readout of a quarterly meeting of the Politburo published late Monday.
Traditionally, the July Politburo meeting sets the tone for China's economic policies for the second half of the year, with market observers avidly awaiting clearer guidance on policy support for China's faltering economic development.
The post-pandemic economic recovery will be "wave-like" and "tortuous," according to the report. At least seven instances of the Chinese phrase for risk appeared in the report, highlighting the government's emphasis on its containment.
A slew of disappointing economic data released last week prompted renewed demands for policy support to boost growth, despite the fact that Premier Li Qiang had previously stated that China is on track to achieve its annual growth target of approximately 5% this year.
According to CNBC, China's gross domestic product grew 6.3% from a year ago and 0.8% from the previous quarter, which is significantly slower than the quarterly growth rate of 2.2% documented from January to March.
