Chinese property stocks rally as banks pledge $38 bln in credit support (updated)

China Overseas Land & Investment

24/11/2022 03:46

(Adds analyst comment, background)
    By Xie Yu
       HONG KONG, Nov 24 (Reuters) - Chinese property shares
jumped on Thursday after the country's biggest commercial banks
agreed to provide at least $38 billion in fresh credit lines to
cash-strapped developers, adding to recent regulatory support
measures to revive their business.
    The stock prices of China Vanke  2202.HK , Country Garden
 2007.HK , China Overseas Land  0688.HK , China Resources Land
 1109.HK , CIFI Holdings  0884.HK  and Greentown China  3900.HK 
rose between 3.4% and 11.1% in Hong Kong.
    A gauge tracking the sector, the Hang Seng Mainland Property
Index  .HSMPI , rose 5.3%.
    Four of China's biggest banks have agreed to provide
fundraising support to property developers, including industry
giants Vanke and Country Garden, in a coordinated effort to
support the embattled property sector.
    Banks are making efforts to follow a regulatory call to
bolster the sector, but most of the new loans will go to
state-backed developers, Shujin Chen, analyst with Jefferies,
said in a note issued on Thursday.
    "Private developers that already defaulted on public debts
will still struggle," she said.
    Beijing has been stepping up measures in recent weeks to
support the property sector, which has been hit by a debt
crisis. 
    The sector has been reeling under mounting debts, defaults,
slower sales and construction suspensions, after the authorities
initiated a campaign to rein in excessive borrowing by
developers.
    Several developers have defaulted on their offshore debt
obligations over the past year, fuelling a sector-wide downturn
that has weighed on the world's second-largest economy.
    To ease the liquidity crunch, the central bank on Wednesday
issued a notice outlining 16 steps to support the sector.
    These include local financial firms allowing real estate
companies to defer repayment of some loans, such as property
development and trust loans, Reuters reported last week, citing
sources with knowledge of the matter.     
 (Reporting by Xie Yu; Editing by Sumeet Chatterjee and Edmund
Klamann)
 ((Yu.Xie@thomsonreuters.com;))