Shares of Chinese property developers rose convincingly on Wednesday, after China pushed to expand debt financing for private companies in a bid to shore up the ailing sector. Hong Kong’s Hang Seng Mainland Properties index rose 7.3%, compared with a 1.2% decline for the city’s benchmark Hang Seng Index. Private developer CIFI Holdings (Group) Co.
jumped 39% to recoup losses over the past month, Country Garden Holdings Co.
rose 24%, and Longfor Group Holdings Ltd.
A self-regulated body comprising an array of financial institutions said Tuesday that it would expand bond-financing tools under the direction of the country’s central bank “to support private companies including real-estate companies.” The move is expected to support about 250 billion yuan (US$34.49 billion) of bond financing by the private sector and can be expanded further, said the National Association of Financial Market Institutional Investors. This is the “second arrow” in a three-part policy approach used in 2018 when some private businesses also faced financing difficulties, it added. The move is a signal that Beijing is willing to find ways to further ease financing problems facing developers, said Ma Hong, senior researcher at Zhixin Investing Research Institute. The low valuations of real-estate stocks together with a series of supportive policies by the central bank in recent weeks triggered the stock rally, he said. Amid a prolonged sector downturn and sluggish home-buyer sentiment, even stronger developers have struggled with liquidity problems, and many have defaulted on their dollar-denominated debt. Earlier measures by Beijing to help the sector included a state-guaranteed bond program for a select group of private developers deemed as higher quality. Write to Clarence Leong at email@example.com and Bingyan Wang at firstname.lastname@example.org