By David Winning
SYDNEY--Australian shares rose to their highest level since June 2015, with Australia & New Zealand Banking Group Ltd. outperforming after selling a stake in a Chinese bank for US$1.32 billion.
The S&P/ASX 200 index closed up 1.2% or 67.4 points at 5733.2 in the first trading session of 2017, with a further tailwind coming from economic surveys that pointed to a buoyant Australian housing market and signs of gathering momentum in the manufacturing sector. A public holiday in New Zealand meant there was no equities trading locally on Tuesday.
The Australian Industry Group's performance of manufacturing index rose 1.2 points in December from November to 55.4 points, indicating activity expanded over the month. Strength in new sales and exports was a highlight of the survey, although it also contained evidence of growing weakness in employment.
ANZ was the strongest gainer among Australia's Big Four retail banks after it agreed to sell a 20% stake in Shanghai Rural Commercial Bank in its latest move to roll back its presence in Asia. ANZ advanced 1.7% to A$30.94 following the deal with China Cosco Shipping Corp. and Shanghai Sino-Poland Enterprise Management Development Corp., which will each acquire 10% of the Shanghai-based bank.
Commonwealth Bank of Australia Ltd. and Westpac Banking Corp. increased by 0.7% and 1.1% to A$82.97 and A$32.95, respectively. The banks--each with sizeable home-loan books--rose in the wake of data suggesting that Australian house prices grew at the fastest pace in seven years through 2016.
According to Corelogic, capital-city house prices increased by 1.4% in December from November, with annual growth running at 10.9%, representing the fastest pace since 2009.
The data also helped investors in Australian residential property developers to shrug off the latest sign that Chinese regulators want to stem capital flight more aggressively, which could weaken one of the pillars holding up domestic real-estate demand.
Mirvac Group and Stockland rose 1.4% and 0.9% to A$2.16 and A$4.62, respectively. Among real-estate investment trusts focused on the CBD office market, Dexus Property Group was up 1.0% at A$9.72 and Investa Office Fund rose 0.2% to A$4.73.
The People's Bank of China recently tightened its supervision of money transfers by individuals in China. The central bank also lowered the threshold on the size of transactions that banks need to disclose to the PBOC--presumably done to control outflows.
Speculation was also percolating over the weekend that Beijing will stop Chinese citizens from using their US$50,000 annual quota to convert yuan into foreign currencies, if they use the money to invest offshore or buy overseas property. The regulator responded by saying this was always the case, but clarified that it would pay more attention to the enforcement of the rule.
Write to David Winning at email@example.com
(END) Dow Jones Newswires
January 03, 2017 00:57 ET (05:57 GMT)
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