Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

China property shares soar on Beijing stimulus, despite continued debt crisis

China property shares soar on Beijing stimulus, despite continued debt crisis

Plans to shore up real estate and tech sectors welcomed by investors, but downgrade of third-biggest developer Sunac shows problems persist
Chinese property shares have soared for a second day thanks to a decision by Beijing’s leadership to throw the country’s struggling real estate sector a lifeline amid growing pressures at home and abroad.

Despite a downgrade for China’s third-biggest property developer Sunac on Thursday, stocks in the sector lifted again in Hong Kong and the mainland thanks to an announcement by vice premier Liu He, China’s economic tsar, on Wednesday that the government needed to reduce risks in the industry.

In a sign of the heightened concern inside China’s Communist party leadership about the property sector and the economy in general – best illustrated by the near-collapse of the giant developer Evergrande – Liu urged the roll-out of market-friendly policies to support the economy.

That pushed up the Hang Seng mainland properties index 14.8% by midday in Hong Kong on Thursday, versus a 5.8% gain in the main Hang Seng index. The sub-index had already jumped 14.7% on Wednesday.

Technology shares have also bounced back after being under pressure for months. The Hang Seng tech tracker rose more than 7% after a stunning 22% gain on Wednesday, though has still halved in value from its peaks last year.

However, some investors are concerned that the property rally is not sustainable because it comes against a backdrop of continued problems for China’s biggest developers.

Sunac China, the nation’s third-biggest property developer by sales, was downgraded to B- credit rating by the agency S&P on Thursday – making it harder to borrow money – because of concerns that it might not be able to meet its huge debt repayments of nearly $4bn due this year.

Analysts at S&P have revised Sunac China’s liquidity position downwards from “less than adequate” to “weak”, and warned that the ratings will be reviewed as soon as “we have greater visibility on Sunac’s refinancing plans”.

They wrote: “Sunac China Holdings Ltd is facing concentrated debt repayment over the next six to 12 months, resulting in considerable refinancing risk and weak liquidity. Capital market confidence is weakening rapidly.”

Despite this gloomy assessment, Sunac’s shares were up 60% in Hong Kong on Thursday afternoon. Other major developer Country Garden and Evergrande were both more than 20% to the good.

The real estate sector, a key driver of growth, has struggled for months as Beijing’s campaign to reduce high debt levels triggered a liquidity crisis among some major developers, resulting in bond defaults and shelved projects.

After Liu’s comment, the banking and insurance regulator also said on Wednesday it would seek to stabilise land and home prices, transform the real estate sector and encourage mergers and acquisition loans for developers to purchase distressed assets.
The finance ministry later said China was putting a planned property tax trial this year on ice, state-run Xinhua news agency reported.

Bill Bishop, the China observer and author of the Sinocism newsletter, said on Thursday that the move by Liu to try to shore up the markets showed how concerned Beijing had become.

“The readout shows how worried policymakers have become about the markets, real estate and the economy but I would be cautious in assuming that the messaging from Liu He and other financial regulators means the tough days are over,” he wrote.

“They are certainly trying to send a signal that they don’t want markets to go down more, but is it not clear this a real shift or more of a calibration to stabilize things.”
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
China Unveils Miniature Insect-Like Surveillance Drone
Marc Marquez Claims Victory at Dutch Grand Prix Amidst Family Misfortune
Germany Votes to Suspend Family Reunification for Asylum Seekers
Budapest Pride Parade Draws 200,000 Participants Amid Government Ban
Southern Europe Experiences Extreme Heat
Xiaomi's YU7 SUV Launch Garners Record Pre-Orders Amid Market Challenges
Jeff Bezos and Lauren Sanchez's Lavish Wedding in Venice
Russia Launches Largest Air Assault on Ukraine Since Invasion
Massive Anti-Government Protests Erupt in Belgrade
Iran Executes Alleged Israeli Spies and Arrests Hundreds Amid Post-War Crackdown
Hungary's Prime Minister Criticizes NATO's Role in Ukraine
EU TO HUNGARY: LET THEM PRIDE OR PREP FOR SHADE. ORBÁN TO EU: STAY IN YOUR LANE AND FIX YOUR OWN MESS.
Hungarian Scientist to Conduct 30 Research Experiments on the International Space Station
×