China's property shares rally after Beijing pledges economic support (updated)

KWG group

25/07/2023 04:57

(Adds analyst comment in paragraph 8-10, adds shares in
paragraph 3)
    By Clare Jim
       HONG KONG, July 25 (Reuters) - Shares of China's
property developers surged on Tuesday following a sharp selloff
in the previous session, after policymakers said they would step
up support for the embattled sector.
    Hong Kong's Hang Seng Mainland Properties Index  .HSMPI 
jumped 12%, while Chinese CSI 300 Real Estate  .CSI000952 
gained 7%.
    Major developers listed in Hong Kong including Country
Garden  2007.HK  and Sunac China  1918.HK  rose 14% while
Longfor Group  0960.HK  rallied 23%. Seazen Group  1030.HK  and
KWG Group  1813.HK  both firmed 16%.
    China's top leaders pledged after a meeting on Monday to
ramp up policy support for the economy amid a torturous
post-COVID recovery, focusing on boosting domestic demand.
    For the property sector, the Politburo, a top
decision-making body of the ruling Communist Party, said it is
necessary to adapt to the new situation caused by significant
changes in market supply and demand, and optimise property
policies in a timely manner.
    While few details of the support measures were provided,
investors focused on one change in tone in particular, which
they thought could mean more property stabilisation steps were
imminent.
    The Politburo did not mention the oft-repeated phrase
"houses are for living in, not for speculation" in the statement
after the meeting.
    "Most important, (Beijing) sent a signal of further easing
property restrictions by dropping the phrase...and mentioning
streaming property policies," Nomura chief China economist Ting
Lu said.
    Lu, however, maintained the view that there is no quick fix
for the property sector, and the central government would only
marginally ease some existing restrictive measures in large
cities.
    Morgan Stanley said the overall statement by Politburo
exceeded investor expectations and that policymakers would
likely roll out a "more sensible and forceful package" that
could include easing second home purchase restrictions in second
tier cities.
    In recent weeks, investors were wary of a deepening debt
crisis in the property sector as new signs of trouble emerged
among state-backed property developers Sino-Ocean Group
 3377.HK  and Greenland Holdings  600606.SS , as well as
property giants Country Garden  2007.HK  and Dalian Wanda Group.
    

 (Reporting by Clare Jim; Editing by Sherry Jacob-Phillips and
Sam Holmes)
 ((clare.jim@thomsonreuters.com;))