Chinese developers Shimao, Aoyuan get stock boost as cities drop curbs, investors sense ‘major shift’ in policy support

Shares in Shimao Group and Aoyuan Group, among others, jumped on Friday after Hangzhou and Xian joined the list of cities dropping curbs

‘Beijing is finally on the right course to clean up the mess in the property sector,’ Nomura analysts said on Friday

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Residential buildings under construction in Jinan, China, on May 9, 2024. Photo: Bloomberg

Published: 6:30pm, 10 May 2024

Shares in Chinese developers jumped on Friday, led by Shimao Group, as the market expects more government stimulus for the property market after several big cities removed purchasing curbs over the past week.

Shimao soared as much as 93 per cent on Friday before closing up 60 per cent at HK$0.36, extending its rise to 75 per cent for the week – the biggest five-trading day jump since trading in the debt-laden developer resumed on July 31.

Peers China Aoyuan Group gained 28 per cent to HK$0.18 and CIFI Holdings increased 11 per cent to HK$0.40. The Hang Seng Mainland Properties Index, a gauge tracking 10 home builders, advanced 4.2 per cent.

More Chinese cities are relaxing restrictions on home purchases, with Hangzhou and Xian joining the list on Thursday, following Chengdu’s removal of such curbs last week.

As of Thursday, about 50 Chinese cities have relaxed restrictions on home purchases, with 22 of those lifting all curbs, according to data compiled by Zhuge Real Estate Research Centre. Among China’s biggest cities, only six still have restrictions in place in some areas: tier-1 cities Beijing, Shanghai, Guangzhou and Shenzhen, and tier-2 cities Tianjin and Haikou, Zhuge said.

The Riviera Garden residential property, developed by Shimao Group in Shanghai, pictured on January 8, 2022. Photo: Bloomberg

Chinese authorities have been pulling more levers to rescue the property sector, which accounts for about one third of the country’s economy. China’s Politburo on April 30 called on local authorities to digest existing housing inventory, fuelling market expectations that Beijing is moving towards an effective way of supporting the market after many rounds of piecemeal stimulus policies.