Property counters lead mainland stock gains

PUBLISHED : Thursday, 18 June, 2009, 12:00am
UPDATED : Thursday, 18 June, 2009, 12:00am

Shares of developers led the climb in mainland shares yesterday, with sector leader China Vanke rising 9.7 per cent to its highest level this year.

Analysts attributed the rise in mainland stocks to liquidity flowing into the market and continued improvement in the property market.

Shenzhen-listed Vanke, the mainland's largest developer, rose sharply in the afternoon to 11.88 yuan (HK$13.49), while China Merchants Property Development gained 6.45 per cent to 29.20 yuan. Oceanwide Estate leapt 10.02 per cent to 18.99 yuan and Cofco Property Group jumped 10 per cent to 10.89 yuan.

The Shenzhen Composite Index gained 16.474 points to 933.021.

Shanghai-listed developers also rose, with Poly Real Estate gaining 8.23 per cent to 25.52 yuan and Gemdale Group climbing 8.17 per cent to 14.57 yuan.

The Shanghai Composite Index gained 34.101 points or 1.23 per cent to 2,810.123.

Wang Zhufeng, an analyst at Evolution Securities China, said the surge in mainland property stocks might be related to strong property sales in recent months.

'Another reason is that the shares of mainland-listed developers have lagged behind the gain in Hong Kong-listed mainland developers,' he said, noting that shares in Vanke had risen 40 per cent from April 1 to yesterday, while those of Hong Kong-listed developers had soared by almost double that, with Guangzhou R&F Properties surging more than 78 per cent during the period.

China Business News reported yesterday the government might introduce rules allowing the formation of real estate investment trusts.

But Peter Bai Hongwei, an analyst with China International Capital Corp, said the market gains were not related to the formation of reits.

'Residential developers such as Vanke and Gemdale led the surge yesterday, not the property investment companies that will benefit from the formation of reits,' he said.

He said there was speculation that the government might release some new policy concerning the property market, but he said it as a mere rumour.

Mr Wang of Evolution Securities said the government would not introduce reits soon because the legislation was not ready.

Another analyst found it difficult to explain the surge in property stocks. 'We didn't hear of any significant news or policy related to the property market yesterday,' she said. 'But the surge reflected the liquidity that is flowing into the market.'

Catching up

Mainland-listed property stocks have lagged those listed in Hong Kong

Since April 1, the shares of China Vanke in Shenzhen exchange have risen: 40