Chinese Property Developers See Record Rally After Beijing Eases Rules
In a surprising turn of events, Chinese property developers experienced an unprecedented surge in their stock prices after Beijing decided to relax regulations for home buyers. This move, aimed at supporting the struggling property market, was met with enthusiasm by investors, leading to a remarkable increase in the value of real estate stocks.
Record Surge in Chinese Real Estate Stocks
- A Bloomberg Intelligence gauge of Chinese real estate stocks saw a historic surge of up to 31% on Oct 2.
- This surge followed Beijing’s announcement on Sept 30, which included making it easier for non-residents to buy property in core areas and reducing minimum down payment ratios.
- Over the last five trading days, the index has risen by a staggering 92%.
Defaulted Developers Experience Exponential Growth
- Stocks of some defaulted developers, such as Shimao Group and Sunac China, witnessed growth of over 200% each during the same period.
- Huarong International Financial saw an astonishing rise of 463% on Oct 2 alone.
Market Euphoria and Stimulus Blitz
The Chinese stimulus measures have had a profound impact on the market, with assets soaring in recent days. The positive sentiment continued in Hong Kong on Oct 2, with the Hang Seng China Enterprises Index experiencing its longest winning streak since January 2018.
Expert Analysis and Market Outlook
According to Mr Raymond Cheng, head of China property research at CGS International Securities Hong Kong, the resolute stance of top central government officials in supporting the property market, combined with the wealth effect from recent stock market rallies, is expected to improve market sentiment and drive better sales in the future. The tier-one cities are likely to be the first to benefit from this sales recovery.
Bullish Trading and Dollar Notes
- Trading of bullish bets on KE Holdings surged to a record high, indicating strong investor confidence in the Asian nation’s property market.
- Some dollar notes of Sunac and Cifi Holdings Group saw significant increases in value in the past five days.
- However, Shimao’s dollar bonds were less traded due to the company’s ongoing debt restructuring plan.
Cautionary Note from Morgan Stanley
Despite the positive market sentiment, analysts at Morgan Stanley cautioned that while the recent measures may stabilize the property market, lifting prices and reviving demand could pose challenges. The drag from the property sector may result in a shortfall in demand, impacting overall growth.
In conclusion, the recent developments in the Chinese property market have sparked optimism among investors, but caution is advised as challenges still lie ahead. Keeping a close eye on market trends and expert analysis will be crucial for navigating the ever-changing landscape of the financial world.