(Bloomberg) -- Chinese stocks rebounded as regulators ramped up liquidity support for developers and a semblance of calm returned after protests against Covid restrictions rocked markets.
The Hang Seng China Enterprises Index gained as much as 2.8% early Tuesday, with Country Garden Holdings Co. and Longfor Group Holdings Ltd. leading the advance. The yuan strengthened against the greenback, while dollar bonds by key developers were indicated higher, according to Bloomberg-compiled prices.
The rebound followed a slump in the previous session when nationwide protests against Covid restrictions and the risk of a government crackdown put investors on edge. China’s securities regulator lifted a multi-year ban on share sales by builders in a bid to support the “stable and healthy” development of the sector, according to a statement late Monday.
The government has been taking bolder steps recently to rescue the property sector, after its piecemeal approach earlier this year failed to reverse a slump. In another sign of easier funding access, a key program to guarantee local bond sales from developers will now accept collateral beyond just their core assets, according to people familiar with the matter.
Tuesday’s stock-market moves tracked gains in the Nasdaq Golden Dragon China Index overnight, when the gauge closed up 2.8% despite a broader US market slump.
The end of a major equity fund raising ban is “another significant positive support on sector liquidity and facilitates the introduction of new strategic investors,” Citigroup Inc. analysts including Griffin Chan wrote in a note, adding the policy will likely benefit onshore-listed names more than those traded offshore.
Chinese assets were facing a potential turnaround moment this month following moves to relax Covid restrictions and a slew of support measures for ailing developers. Key equity indexes are headed for the best month in years, though the outlook for China’s Covid Zero pivot is now unclear as the nation grapples with a worsening outbreak.
A Bloomberg Intelligence gauge of developers jumped more than 6%, taking this month’s advance to nearly 60%.
The offshore yuan broke a four-day losing streak, gaining as much as 0.5% to 7.2139 per dollar. The onshore unit tracked similar gains after the central bank set its daily reference rate at a mildly stronger level.