PanamaTimes

Friday, Apr 26, 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
Apple warns against drying iPhones with rice
In a recent High Court hearing, the U.S. argued that Julian Assange endangered lives by releasing classified information.
Global Law Enforcement Dismantles Lockbit Ransomware Operation
Russian opposition leader Alexey Navalny has died at the Arctic prison colony
The President of Argentina Javier Mile does not fly private, he flies commercial, with the citizens he represents. And they LOVE him for it.
Bitcoin Reaches $50,000 for First Time in Over Two Years
Belo Horizonte: Brazil's Rising Carnival Hotspot for 2024
In El Salvador, the 'Trump of Latin America' stuns the world with a speech slamming woke policing after winning a landslide election
Tucker’s interview with Putin is over 50M views on X within the first 5 hours.
Finnish Airline, Finnair, is voluntarily weighing passengers to better estimate flight cargo weight
President Nayib Bukele has proudly announced El Salvador's remarkable achievement of becoming the safest nation in the Western Hemisphere.
Former Chilean President Sebastian Piñera Dies in Helicopter Crash
This farmer seems to understand science a bit more than the event organizer, Klaus Schwab.
Facebook turns 20: From Mark Zuckerberg's dormitory to a $1trn company
The Coolest Dictator in the World" on the Path to Victory in El Salvador
Macron, France and fake news
Indian-Origin Man 'King' Arrested For Smuggling $16 Million Drugs Into US
Can someone teach Americans that not every person with slanted eyes is Chinese?
Europe's Farmers Feeding the People, Protesting Against Politicians Who Do Nothing for Their Country and Serve Only Themselves at Taxpayers' Expense
Paris Restaurant That Inspired 'Ratatouille' Loses $1.6 Million Worth Of Wine
Brazilian Police Investigate Bolsonaro's Son for Alleged Illegal Spying
Police in Brazil Raid Residence of Bolsonaro Associate Over Allegations of Illegal Spying
Border Dispute Escalates as Texas Governor Vows Increased Razor Wire
OpenAI Enhances ChatGPT-4 Model, Potentially Addressing AI "Laziness" Issue
The NSA finally acknowledges spying on Americans by acquiring sensitive data
Report Reveals Toxic Telegram Group Generating X-Rated AI-Generated Fake Images of Taylor Swift
US Border Patrol States 'No Plans' to Remove Razor Wire Installed in Texas
Bitcoin Experiences Approximately 20% Decline in Value
Klaus Schwab recently appointed himself as the Earth's "trustee of the future."
DeSantis Drops Out, Endorses Trump.
Nikki Haley said former President Trump is "just not at the same level" of mental fitness as he was while president in 2016.
Residents of a southern Mexican town set the government palace on fire in response to the police killing of a young man
Samsung Launches AI-Driven Galaxy S24, Ushering in New Smartphone Era
Judge Questions SEC's Regulatory Overreach in Coinbase Lawsuit
The Ecuador prosecutor who was investigating the television studio attack, has been assassinated.
Is artificial intelligence the solution to cyber security threats?
Vivek Ramaswamy suspends his US election campaign and endorses Trump.
Viral Satire: A Staged Satirical Clip Mistaken as Real Footage from the 2024 World Economic Forum in Davos
The AI Revolution in the Workforce: CEOs at Davos Predict Major Job Cuts in 2024
Ecuador Reports 178 Hostages in Prison Gang Standoff
The Startling Cuban Espionage Case That Has Rattled the US Government
Two Armed Men in Ecuador, Dressed as Batman and The Joker Storm the Streets.
Armed Gang Raids Ecuadorian TV Station Following State of Emergency Declaration
Anti-Democratic Canada: Journalist Arrested for Questioning Canadian Finance Minister on Support of Terrorist Group
Ecuador's 'Most-Wanted' Criminal Vanishes from Prison
Mexican Cartel Supplied Wi-Fi to Locals Under Threat of Fatal Consequences for Non-Compliance
Border Surge Leads to Over 11,000 Migrants Waiting in Northern Mexico
Outsider Candidates Triumph in Latin American Elections
As Argentina Goes to the Polls, Will the Proposal to Replace the Peso with the Dollar Secure Votes?
Fatal Shark Attack Claims Life of Boston Woman Paddleboarding Near Bahamas Resort, According to Police
×