Chinese property shares rally on stimulus hopes (updated)

Kaisa group

29/04/2024 06:44

(Adds analyst comments, context, CIFI and Kaisa's restructuring
progress)
    By Clare Jim and Xie Yu
       HONG KONG, April 29 (Reuters) - Shares of Chinese
property developers rallied on Monday on speculation more
stimulus measures are likely to be unveiled this week aimed at
clearing inventory, boosting sales and lifting home purchase
restrictions.
    Hong Kong's Hang Seng Mainland Properties Index  .HSMPI 
jumped 4.3% in the morning session, while mainland China's CSI
300 Real Estate Index  .CSI000952  surged 6.9%, both to near
four-month highs.
    The rally appeared to be driven by speculation the 
Communist Party Central Committee's Political Bureau will meet
in late April to discuss loosening property policies, analysts
said.
    Private property developers including Sunac China  1918.HK ,
and defaulted Shimao Group  0813.HK , KWG Group  1813.HK ,
Zhenro Properties  6158.HK , Fantasia  1777.HK  and Kaisa Group
 1638.HK , all gained more than 20%.
    A Hong Kong court on Monday adjourned a hearing to liquidate
Kaisa to May 27, as the Shenzhen-based developer said it aims to
iron out restructuring terms in the coming four weeks.
    State-backed China Vanke's  2202.HK  shares in Hong Kong
bounced 17% while its shares in Shenzhen rose 10%.
    Investors have been dumping Vanke's shares and bonds in
recent months on liquidity concerns. The company is due to
announce its first quarter results on Monday.
    CIFI shares firmed 17%, after the developer said it had
reached an agreement with bondholders on an offshore debt
restructuring plan.
    Monday's rally followed a 14% rise in the Hong Kong mainland
properties sub-index last week, which was driven in part by
China's securities regulator's plans to support the financial
hub's capital market development.
    However, analysts expect the current rally to be
short-lived.
    "For now, we haven’t seen any sign of improvement in
fundamentals. Property sales are still dropping," said Mark
Dong, co-founder and general manager of Minority Asset
Management in Hong Kong. His company has been avoiding property
stocks.
    "There certainly is hope that the central and local
governments will introduce more supportive measures. But apart
from more interest rate cuts, other measures, like capital
support from local governments will be quite hard to be
implemented, as we know they are facing restrained resources
themselves."
    New home prices in China fell at their fastest pace in more
than eight years in March as developers' debt woes dragged on
demand and the outlook.
    Chinese authorities have been ramping up measures to prop up
the troubled sector, including relaxing home purchase curbs,
supporting urban village renovation, and pushing banks to
quicken loan approvals to cash-strapped developers.
    However, analysts say many of these policies are piecemeal
in nature or have only limited short-term impact.
    JPMorgan said in a note that a sustainable rally in the
sector would require a meaningful sales recovery and stronger
policy responses.
    

 (Reporting by Clare Jim and Xie Yu; Additional reporting by
Beijing bureau; Editing by Shri Navaratnam and Sam Holmes)
 ((clare.jim@thomsonreuters.com;))