Ban on China developer equity capital raisings to be lifted for cheap housing
The policy change is a sign the new leadership will phase out measures introduced by the previous administration, such as restricting home purchases, to clamp down on the property sector.
Beijing is poised to lift a three-year ban on capital raisings on mainland stock exchanges by property developers, as part of Premier Li Keqiang's efforts to accelerate the construction of low-cost housing and upgrade living standards in run-down areas.
The policy change is a sign the new leadership will phase out measures introduced by the previous administration, such as restricting home purchases, to clamp down on the property sector.
Instead, the incumbent cabinet is likely to rely on market forces to rein in the runaway housing industry, say people with knowledge of the thinking of top regulators.
According to officials at investment banks and property developers, the China Securities Regulatory Commission (CSRC) has started accepting applications from listed developers to sell shares. Yet it is not clear when the first capital raising on either the Shanghai or Shenzhen stock exchanges would be allowed.
Developers willing to earmark the proceeds of the capital raisings for the construction of low-income housing for poor people or for the upgrading of dilapidated dwellings in run-down areas would be the first to get approval to raise funds on the stock market, the sources said.
"It's quite likely that the ban on such raisings will be lifted very soon," said one person at a Shanghai securities company. "But the regulator has yet to make it clear which developers will qualify for the refinancing."
The CSRC told a media briefing on Friday that it would not give the go-ahead to developers' refinancing proposals unless applicants obtained approval from the Ministry of Land and Resources. A CSRC statement indicated that the securities regulator would open the door for developers' refinancing plans.