China's first REITs make solid debut in Shanghai and Shenzhen (updated)
21/06/2021 05:55
(Adds more details, analyst quotes)
SHANGHAI, June 21 (Reuters) - China's first batch of REITs
made their stock market debut on Monday with solid initial
gains, as the nine real estate investment trusts drew interest
from Chinese retail investors.
All the newly-listed REITs - five in Shanghai and four in
Shenzhen - opened higher on Monday, but their performance varied
hugely, as investors bet on potential land price gains in
industrial park projects, but showed tepid interest in highway
assets.
The biggest REIT gainers were the Bosera CMSK Industrial
Park fund 180101.SZ and the AVIC Shougang Biomass fund
180801.SZ , which both jumped as much as 20%.
By contrast, the PingAn Guangzhou-Heyuan Expressway Fund
180201.SZ only rose 1% in morning trade.
"New types of investment products often attract eyeballs and
become the target of stir-frying (speculation) in China," said
Cai Hongfei, analyst at Hong Kong-based brokerage Central
Wealth.
China is launching a public REITs market to channel private
money into infrastructure projects https://www.reuters.com/article/china-reits-subscription-idUSL2N2NI14X,
ranging from toll ways to sewage plants, to ease debt burdens
on local governments. REITs trade like stocks but offer stable
cash dividends like bonds.
But limited supply of the instruments initially and a sense
of novelty are attracting retail interest in REITs, typically
favoured by long-term, institutional investors.
China's REITs market will likely witness high volatility
over the next few months before sentiment calms down, added Cai.
The Shanghai Securities News, a local newspaper, advised
investors to be rational.
"REITs investors should not dream of becoming rich
overnight," the state media said in a commentary.
"You should not stir-fry REITs as newly-listed stocks, and
should avoid herd investing."
TOP GAINER
The Bosera CMSK Industrial Park fund rose to 2.67 yuan
($0.4127) by midday, 16% higher than its offer price of 2.31
yuan, giving the REITs a 15% premium over the value of its
underlying assets.
Central Wealth's Cai said the jump in the fund partly
reflected investor bets that land prices in the Shenzhen
industrial park will rise, generating capital gains in addition
to stable rental incomes.
China is only allowing REITs to invest in infrastructure
projects, in contrast to markets in Hong Kong, Singapore, and
United States, where they can also invest in shopping malls and
office buildings.
A broader China REITs market that eventually covers
commercial properties could reach over $3 trillion, according to
a Goldman Sachs estimate - surpassing the United States as the
world's largest.
($1 = 6.4689 Chinese yuan)
(Reporting by Samuel Shen, Luoyan Liu and Andrew Galbraith;
Editing by Himani Sarkar and Ana Nicolaci da Costa)
((samuel.shen@thomsonreuters.com; +86 21 20830018; Reuters
Messaging: samuel.shen.thomsonreuters.com@reuters.net))