Double boost for property stocks as China pledges support for homebuyers amid industry slump and Evergrande pays up
- Property stocks capped one their best weeks this year as China pledged support for homebuyers with easy mortgage financing
- Evergrande risk subsided as developer was reported to have made payment for bond interest before a Saturday deadline
Seazen Group and Sunac China surged at least 8 per cent in Hong Kong on Friday trading. China Vanke, the nation’s biggest listed developer, added 2.8 per cent in the city while its Shenzhen-listed shares gained 2.9 per cent. Tianjin Jinbin Development was the best performer on mainland bourses, jumping by the 10 per cent daily limit in Shenzhen.
“With policy environment tending to be more neutral in the next six to 12-month horizon and the sector is trading at historical trough valuation [of 2.7 times projected earnings], we are turning less bearish on developers,” said Stephen Cheung, an analyst at Jefferies.
Sentiment improved after comments on Thursday by Liu Zhongrui, head of statistics and risk monitoring at the China Banking and Insurance Regulatory Commission, that it will protect real demand for housing in a sign that authorities are monitoring cracks in the industry.
First-time homebuyers will be given breaks on down payments and mortgage rates, Liu said, a day after vice-premier Liu He said at a financial forum in Beijing that the risk in property market was controllable despite the Evergrande debt woes and “reasonable” demand for capital will be met.
Stocks also gained another booster from a report by the Securities Times, a publication under the People’s Daily, that embattled China Evergrande has remitted US$83.5 million to pay offshore bondholders before a Saturday deadline to avert a default.