Chinese Property Developers’ Shares Rebound on Policy Support Pledge
WHAT YOU SHOULD KNOW
- Chinese property developers’ shares and bonds experienced a sharp selloff in the previous session but rebounded significantly following policymakers’ commitment to support the embattled sector.
- The Hong Kong Hang Seng Mainland Properties Index jumped 12%, and the CSI 300 Real Estate benchmark gained over 7%.
- China’s top leaders pledged to boost policy support for the economy, including measures to stabilize the property sector, leading to optimism among investors despite concerns about a debt crisis in the industry.
On Tuesday, Chinese property developers’ shares and bonds experienced a surge in investor interest, bouncing back from a sharp selloff in the previous session. The renewed optimism was triggered by policymakers’ announcement that they would increase support for the struggling sector. The Hang Seng Mainland Properties Index in Hong Kong surged by 12%, while the CSI 300 Real Estate benchmark gained over 7%. Major developers such as Country Garden and its management unit, Country Garden Services, rebounded by 15% and 22%, respectively, after facing significant declines on Monday.
China’s top leaders made a commitment to boost policy support for the economy, with a focus on bolstering domestic demand as the nation navigates its post-COVID recovery. The Politburo, a key decision-making body of the ruling Communist Party, emphasized the need to adapt property policies promptly in response to market supply and demand changes. While specific details of the support measures were not disclosed, investors took note of a change in tone that could signal further steps towards stabilizing the property sector. Notably, the oft-repeated phrase “houses are for living in, not for speculation” was absent from the statement after the meeting.
Despite the positive market response, analysts cautioned that further property easing was unlikely to be substantial and could potentially vary on a “city by city” basis. Nomura’s chief China economist, Ting Lu, suggested that the government may only marginally ease some existing restrictive measures in larger cities. Morgan Stanley predicted a more comprehensive package of measures, including potential easing of second home purchase restrictions in second-tier cities. Investors had been concerned about a deepening debt crisis in the property sector, especially after recent signs of trouble emerged among state-backed property developers like Sino-Ocean Group, Greenland Holdings, Country Garden, and Dalian Wanda Group.
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