Shares of Chinese real estate companies surged after reports that Beijing may order state groups to guarantee some developer bonds issued in the country’s onshore market.
The Hang Seng Mainland Property Index rose 10.5% on Tuesday as investors surged shares after reports that the state-owned group may help the property group issue yuan-denominated bonds.
Hong Kong-listed shares of Country Garden and Longfor Properties rose as much as 18%, while shares of Gemdale Properties and CIFI Holdings rose 7.6% and 19.4% respectively.
The rise follows a report by emerging market intelligence group REDD property Policymakers reportedly planned to provide liquidity support to the group by ordering the state-owned group to underwrite and guarantee the issuance of new yuan-denominated bonds.
The report names Country Garden, Gemdale, Longfor, and CIFI as shortlisted developers for government support. Traders said the plan could boost low-risk developers who can refinance their debt in the onshore market. been under pressure This year, as the sector grapples with a liquidity crisis and slowing economic growth.
“Many traders expect direct support and guarantees from state-owned banks,” said a trader at a Shanghai-based Asian brokerage firm. “Market sentiment will improve as long as liquidity is backed up.”
The central government’s developer debt relief could give much-needed reprieve to China’s housing market, which has been in turmoil since Evergrande, the world’s most indebted developer. defaulted on dollar bond payments last year.
Many other developers have since defaulted on their repayment obligations in both dollars and renminbi. This has led to broader skepticism about the rest of the industry, which has come to rely heavily on the sale of unfinished homes for revenue as the government cracks down on excessive leverage.
Questions about whether developers can offer second-hand homes have spurred hundreds of thousands of homebuyers across China. boycott mortgage payments This year, it has constrained sales and exacerbated the liquidity crunch.
Hong Kong’s Hang Seng Mainland Property Index is down 43% year-to-date, and Chinese developers will lose about $54 billion in market capitalization in 2022, according to Bloomberg data.