By Jiahui Huang
Chinese property stocks climbed in Hong Kong trade amid rising hopes that Beijing will soon make dozens of companies eligible for financing, including developers that have defaulted on debt.
The Hang Seng Mainland Properties Index, which tracks Chinese property developers, rose 4.3% on Thursday morning, lifting gains this week to 9.1%. CIFI Holdings surged 55% and Sino-Ocean Group gained 28%, while Country Garden Holdings, Kaisa Group, Agile Group, Guangzhou R&F Properties and Logan Group all gained between 11% and 18%.
The gains come after a Bloomberg report citing people familiar with the matter said Chinese officials have prepared a draft "white list" of 50 property developers eligible for financing support. The outlet said Wednesday that the list includes companies that have missed debt payments, such as CIFI and Country Garden, and could be sent to financial institutions within days.
Nomura analysts think the share rally is likely to continue in the short term, fueled by the reports of the white list and Chinese regulators' planned liquidity injections for the sector. However, they "do not expect any sustained outperformance in developers' share prices until there is more clarity on whether property sales can bottom after the recent policy moves," Nomura analyst Jizhou Dong wrote in a research note.
A major question now is whether commercial banks "are incentivized enough to expand their financing exposure to defaulted developers," the analyst added.
The sector was also supported by news overnight that the Shenzhen branch of the People's Bank of China will trim down payment requirements on purchases of second homes, Saxo market strategist Redmond Wong said.
"Banks are under heightened pressure to bear losses on loan restructuring and rolling over loans," Wong added, adding that investors should research private developer names to discern the winners from the losers.
China's property sector continues to drag on the world's second-largest economy despite Beijing's stimulus efforts. Home sales by value fell 3.7% from a year earlier in the first 10 months of 2023, official data showed last week.
Write to Jiahui Huang at jiahui.huang@wsj.com
(END) Dow Jones Newswires
November 22, 2023 23:54 ET (04:54 GMT)
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