A new wave of property stimulus measures is brewing that should fuel a recovery in market sentiment across mainland China as the country’s top decision-makers pledged to tackle housing inventories, according to analysts. However, some observers worried the much-needed support might be too little too late.
China property shares continued to rally on Thursday as industry leaders China Vanke and Shimao jumped as much as 14.7 per cent and 11.1 per cent respectively in intraday trading. The Hang Seng Mainland Properties Index, a gauge tracking 10 home builders listed in Hong Kong, advanced 4.5 per cent to 1,430.88 at the Thursday close, the highest so far this year.
The rally comes as speculation mounts that moves to stimulate the flagging property market are on the way. Top officials at a Politburo meeting on Tuesday said they are assessing comprehensive measures to reduce the housing inventory and boost sales.
“This is a quick, positive policy change, in our view, and we think that policy banks should provide funds to local governments to achieve inventory reduction goals, as was successfully done in China in 2014-2019,” said Raymond Cheng, managing director of CGS International Securities Hong Kong.
He was referring to a strategy that provides the funds for local governments and their platforms to purchase unsold units from developers and use deploy them as social housing.
“It would be a ‘win-win’ for both government and developers if that really happens,” he added. “The move, if implemented, will not only rapidly reduce inventory levels, but improve developers’ liquidity.”
Japanese investment bank Nomura was cautiously optimistic about the supportive messages that came from Tuesday’s meeting.
“We believe the policy stance of the Politburo has turned marginally more supportive to the property sector, given its increased emphasis on resolving the abundant housing inventory issue,” analysts led by Dong Jizhou said in a report on Wednesday. Source: SCMP
