China property stocks soar on hopes of government support to boost sector

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6th June 2023 – (Beijing) China property stocks listed in Hong Kong saw a nearly 8% increase in value on Tuesday as investors held on to hopes that Beijing would soon introduce supportive measures to bolster the embattled sector. Shares of major developer Longfor Group surged 11%, while defaulted peers Sunac China and KWG Group gained 12% and 18.6%, respectively, outpacing the 1.2% rise in the broader Hang Seng Index.

Investors’ expectations for further national stimulus policies increased last Friday after several second-tier cities announced their own supportive measures. The property sector, which was once a pillar of economic growth, plummeted sharply last year as developers defaulted on debt or bonds and suspended construction of presold housing projects.

To stabilise the property market, policymakers have implemented measures since the second half of 2022. The lifting of tough COVID-19 restrictions in December also gave the sector a boost. Analysts believe that potential measures could include lower down-payment and home purchase requirements, as well as refined measures to boost developers’ liquidity.

Property stocks listed in mainland China posted modest gains on Tuesday, with the CSI 300 Real Estate Index rising 2.3%. While investors remain hopeful for a recovery in the property sector, it remains to be seen whether the government will take further action to support the industry.