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Stocks

Mainland developers prop up Hong Kong shares

HONG KONG (NewsRise) -- Hong Kong shares rose for a second day Tuesday, helped by gains in mainland property developers after they reported robust February sales numbers.

The Hang Seng Index ended 0.4% higher at 23,681.07. China Overseas Land & Investment added 1.9% to HK$23.80 after reporting a 50% jump in February sales late Monday, while Sunac China Holdings advanced 1.5% after February sales more than tripled from a year ago. China Resources Land, still due to report last month's numbers, and China Vanke, whose February sales more than doubled from a year ago, added at least 2.7% each.

"February sales have been quite good in spite of the recent measures to cool demand and this is helping the rally in the China property stocks," said Steven Leung, executive director of institutional sales at UOB Kay Hian. "The other reason is probably that there is relief that were no particular measures to tighten China property markets over the weekend."

Several Chinese cities since October have imposed curbs on home purchases and tightened bank lending norms for the residential sector in a bid to control runaway property prices, fuelling speculation that China may levy a property tax to cool surging prices. Over the weekend, the spokeswoman for China's parliament was reported to have said that the nation has no plans to implement nationwide property tax this year.

"Property policies will remain differentiated as the government wants to avoid property market "fluctuations", suggesting an equal desire to prevent both a sharp downturn and a bubble. The much talked about property tax is reportedly not in the legislative agenda for this year and hence unlikely to be implemented soon," UBS said in a note.

Chinese premier Li Keqiang, delivering the government work report on Sunday, promised establishment of long term mechanisms to promote sound development of the sector.

The Shanghai Composite and its Shenzhen counterpart rose 0.3% each, recovering from intraday losses. The onshore traded yuan was little changed against the dollar at 6.8975. China's foreign exchange reserves rose to $3.005 trillion as of the end of February, compared with $2.998 trillion at the end of January, data released by the People's Bank of China on Tuesday showed.

Markets await China's trade data for February, due Wednesday, and last month's inflation print on Thursday.

Regional sentiment was dominated by expectations of a near-certain Federal Reserve rate increase next week. The Nikkei Asia300 Index, which tracks over 300 companies in the region, was 0.4% higher at 1,127.52.

MTR slipped 0.6% to HK$41.45. Shortly after markets closed, the railway operator reported a 21% decline in 2016 net profit to HK$10.25 billion ($1.32 billion).

Chinese offshore oil producer CNOOC edged 0.1% lower to HK$9.10. Nomura downgraded the stock to "neutral" from "buy," citing higher costs and balance sheet risks. The brokerage cut the stock's target price to HK$10 to reflect dividend and impairment concerns.

Agile Group Holdings, joining the broad rally in Chinese developers, jumped 5.3% to HK$5.53 after it reported late Monday that pre-sales value for February stood at 6.41 billion yuan ($0.92 billion).

--Nimesh Vora

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