HONG KONG (Reuters) - Hong Kong developer Chinese Estates Holdings (HK:0127) said on Wednesday it holds a 6 percent stake in rival property group China Evergrande (HK:3333), having bought HK$11.1 billion (£1.07 billion) of shares between April and October 3.
The news sent shares in Evergrande, one of China's most indebted companies, up as much as 3.9 pct to HK$30.80 by midday trade, a record high. Shares of Chinese Estates rose 4.3 percent, outperforming a 0.8 percent rise in the benchmark index (HSI).
Chinese Estates said it was optimistic about Evergrande's prospects, but did not provide further detail on the purchase.
Evergrande, which has developed thousands of middle class homes in China and owns the country's top football team, was one of the most heavily shorted Hong Kong stocks earlier this year.
Analysts said Evergrande was also benefiting from an increased average selling price, according to its September sales, published late on Tuesday.
"In the year to date, the company has achieved decent sales growth, mainly supported by rising (prices) as Evergrande strived to move to higher tier cities," said Chuanyi Zhou, Credit Analyst at independent research firm Lucror Analytics.
China's home prices have surged since late 2015 and the housing rally has been one of the main drivers of China's stronger-than-expected economic growth so far this year, though successive waves of cooling measures are expected to temper construction activity and investment in coming months.