Chinese real estate stocks soar as banks pledge $38 billion in credit support

Chinese real estate stocks soar as banks pledge $38 billion in credit support
Chinese real estate stocks soar as banks pledge $38 billion in credit support

Share prices of China Vanke, Country Garden, China Overseas Land, China Resources Land, CIFI Holdings and Greentown China rose 3.4% to 11.1% in Hong Kong.

A gauge for the sector, the Hang Seng Mainland Property Index rose 5.3%.

Four of China’s largest banks have agreed to raise money for real estate developers, including giants Vanke and Country Garden, in a coordinated effort to support the troubled real estate sector.

Banks are making efforts to heed a government call to support the sector, but most new loans will go to state-backed developers, Jefferies analyst Shujin Chen said in a note Thursday.

“Private developers who have already defaulted on their government debt will still struggle,” she said.

Beijing has stepped up measures in recent weeks to support the property sector stricken by a debt crisis.

The sector has been hit by mounting debt, defaults, slower sales and construction freezes after authorities launched a campaign to curb excessive developer lending.

Several property developers have defaulted on their foreign debt obligations over the past year, fueling an industry-wide downturn that has weighed on the world’s second-largest economy.

To alleviate the liquidity squeeze, the central bank published a statement on Wednesday with 16 measures to support the sector.

These include local financial institutions that allow real estate companies to defer repayment of some loans, such as real estate development and trust loans, Reuters reported last week, citing sources with knowledge of the matter.

The article is in Dutch

Tags: Chinese real estate stocks soar banks pledge billion credit support

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