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Chinese Property Stocks Rally on Hope for More Policy Support
Shares of Chinese property developers extended a rally as investors expect Beijing to unveil more policy support after a Friday meeting to salvage the beleaguered property market.
Shares of Chinese property developers extended a rally as investors expect Beijing to unveil more policy support after a Friday meeting to salvage the beleaguered property market.
A Bloomberg Intelligence gauge of Chinese real estate stocks rose 2.8% after an 11% jump Thursday. CIFI Holdings shares rose as much as 8.2%, while Agile Group jumped 8.1%. Shimao Group climbed 6.4%.
Key Chinese government officials are meeting Friday morning to discuss the property market, including a proposal to clear excess housing inventory, people with knowledge of the matter said. Senior officials from the housing ministry, financial regulators, local governments and state banks will attend the gathering via video conference.
The meeting is the latest effort by Chinese leaders who are increasingly prioritizing efforts to address the biggest drag in the world’s second-largest economy. Some major cities such as Hangzhou and Xi’an have recently scrapped restrictions on property purchases. The Bloomberg property stock gauge has jumped about 60% from an April 19 low.
“The meeting illustrates Chinese government’s seriousness about the sector and we expect more concrete measures to announce to address property market problems,” Raymond Cheng, head of China property research at CGS International Securities HK, says
China also is considering a proposal to have local governments buy millions of unsold homes, Bloomberg News reported earlier this week, in what would be one of the country’s most ambitious attempts to rescue the sector.
Still, concerns over years-long sump in homes sales still linger. “While regulators have turned more dovish on housing policy, we think the impact on property sales and home prices remains highly uncertain,” Morgan Stanley analysts including Stephen Cheung wrote in a note.
“The implementation of the inventory-clearing initiative could disappoint with a below-expectation scale of funding,” the analysts wrote.
China’s home sales plummeted about 47% in the first fourth months of this year, and unsold housing inventory is hovering at an eight-year high.
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