PanamaTimes

Saturday, Sep 07, 2024

China property shares soar on Beijing stimulus, despite continued debt crisis

China property shares soar on Beijing stimulus, despite continued debt crisis

Plans to shore up real estate and tech sectors welcomed by investors, but downgrade of third-biggest developer Sunac shows problems persist
Chinese property shares have soared for a second day thanks to a decision by Beijing’s leadership to throw the country’s struggling real estate sector a lifeline amid growing pressures at home and abroad.

Despite a downgrade for China’s third-biggest property developer Sunac on Thursday, stocks in the sector lifted again in Hong Kong and the mainland thanks to an announcement by vice premier Liu He, China’s economic tsar, on Wednesday that the government needed to reduce risks in the industry.

In a sign of the heightened concern inside China’s Communist party leadership about the property sector and the economy in general – best illustrated by the near-collapse of the giant developer Evergrande – Liu urged the roll-out of market-friendly policies to support the economy.

That pushed up the Hang Seng mainland properties index 14.8% by midday in Hong Kong on Thursday, versus a 5.8% gain in the main Hang Seng index. The sub-index had already jumped 14.7% on Wednesday.

Technology shares have also bounced back after being under pressure for months. The Hang Seng tech tracker rose more than 7% after a stunning 22% gain on Wednesday, though has still halved in value from its peaks last year.

However, some investors are concerned that the property rally is not sustainable because it comes against a backdrop of continued problems for China’s biggest developers.

Sunac China, the nation’s third-biggest property developer by sales, was downgraded to B- credit rating by the agency S&P on Thursday – making it harder to borrow money – because of concerns that it might not be able to meet its huge debt repayments of nearly $4bn due this year.

Analysts at S&P have revised Sunac China’s liquidity position downwards from “less than adequate” to “weak”, and warned that the ratings will be reviewed as soon as “we have greater visibility on Sunac’s refinancing plans”.

They wrote: “Sunac China Holdings Ltd is facing concentrated debt repayment over the next six to 12 months, resulting in considerable refinancing risk and weak liquidity. Capital market confidence is weakening rapidly.”

Despite this gloomy assessment, Sunac’s shares were up 60% in Hong Kong on Thursday afternoon. Other major developer Country Garden and Evergrande were both more than 20% to the good.

The real estate sector, a key driver of growth, has struggled for months as Beijing’s campaign to reduce high debt levels triggered a liquidity crisis among some major developers, resulting in bond defaults and shelved projects.

After Liu’s comment, the banking and insurance regulator also said on Wednesday it would seek to stabilise land and home prices, transform the real estate sector and encourage mergers and acquisition loans for developers to purchase distressed assets.
The finance ministry later said China was putting a planned property tax trial this year on ice, state-run Xinhua news agency reported.

Bill Bishop, the China observer and author of the Sinocism newsletter, said on Thursday that the move by Liu to try to shore up the markets showed how concerned Beijing had become.

“The readout shows how worried policymakers have become about the markets, real estate and the economy but I would be cautious in assuming that the messaging from Liu He and other financial regulators means the tough days are over,” he wrote.

“They are certainly trying to send a signal that they don’t want markets to go down more, but is it not clear this a real shift or more of a calibration to stabilize things.”
Newsletter

Related Articles

PanamaTimes
0:00
0:00
Close
BRAZIL’S SUPREME COURT MINISTER ORDERS EXPLANATION ON X BLOCKING
Porn streamer OnlyFans paid owner $630mn in dividends
Donald Trump will not face sentencing over his 'hush money' conviction before the US presidential election on November 5, after a Manhattan judge granted his request to delay the proceeding
Return of Brazilian Artworks to Bahia
France Pilots Mobile Phone Ban in Schools
WHO-Led Study Finds No Link Between Mobile Phones and Brain Cancer
Kamala Harris is in Detroit and has a new accent again
EU Rejects Maduro’s Election Win Claim in Venezuela
Former Red Brigades Member Arrested in Argentina After 40 Years on Run
Elon Musk Accuses Brazilian Supreme Court Justice of Election Interference
Universe May Have Had a Pre-Big Bang 'Secret Life'
Ecuador's Narco Violence Threatens Scientists and Conservation Efforts
Brazilian Judge Alexandre de Moraes Blocks Elon Musk's X
Nаkеd American woman gropes security
Tsimane Tribe: Secrets to Health and Slow Ageing
OpenAI Blocks Iranian Group's ChatGPT Accounts for Election Interference
WHO Declares Mpox Global Health Emergency Again
Decline in World Records at Paris Olympics: An Analysis
EU Pressures Elon Musk Over Trump Interview
UN Reports Lowest Global Youth Unemployment Rate in 15 Years
Fatal Plane Crash Near Sao Paulo
Snoop Dogg: The Feel-Good Spirit of the Paris Olympics
McDonald's Worker Sets Restaurant On Fire Over Customer Frustration
Kamala Harris Confirmed as Democratic Candidate for US Presidential Election
Controversies at the Paris Olympics
Elon Musk Accepts Fight Challenge from Venezuelan President Nicolas Maduro
First Case of 'Virgin Birth' in Endangered Shark Species in Italy
G20 Fails to Reach Agreement on Global Billionaire Tax
Mexican Drug Lords El Mayo and El Chapo's Son Arrested in Texas
World's Hottest Day Recorded on July 21
Joe Biden Withdraws from 2024 US Presidential Race
A Week of Turmoil: Key Moments in US Politics
Global IT Outage Sparks Major Concerns
Global IT Outage Unveils Digital Vulnerabilities
Secret Service Criticized for Lack of Sniper Protection During Trump Shooting
Colombian Court Annuls Amazon Tribes’ Carbon Credit Deal
Sunita Williams Safe on ISS, to Address Earth on July 10
Biden Affirms Commitment To Presidential Race
Boeing Pleads Guilty Over 737 MAX Crashes
Beryl Storm Hits Texas, Killing 2 and Causing Major Power Outages
2024 Predicted to Be World's Hottest Year
Macron Faces New Political Challenges Despite Election Relief
Florida Man Arrested Over Attempt to Withdraw One Cent
Anger mounts at Biden’s top team after disastrous debate
Bolivian President Luis Arce Denies 'Self-Coup' Allegations
Steve Bannon Begins 4-Month Prison Sentence
Biden Warns of 'Dangerous Precedent' After Supreme Court Immunity Ruling in Trump Case
Elon Musk Accuses Kamala Harris of Misleading Post on Trump's Abortion Stance
Hunter Biden Sues Fox News Over 'Revenge Porn' Allegations
New York Times Editorial Board Urges Biden to Exit Presidential Race
×