China real estate stocks soar as investors bet on stimulus hopes – Reuters

HONG KONG, June 6 (Reuters) – Chinese real estate stocks listed in Hong Kong (.HSMPI) rose as much as 7.9% on Tuesday as investors clung to hopes that Beijing would soon take more supportive measures to bolster the embattled sector.

Once a pillar of economic growth, the sector has weakened since April after a short-lived rally as the gloomy economic outlook outweighed the impact of policy measures rolled out late last year.

The state-backed China Economic Times called for an adjustment of housing purchase restrictions in frontline cities, citing industry views that the move would help clear inventory in non-core districts, without lifting prices in core areas. to conduct.

The newspaper, sponsored by the State Council or cabinet, added that market participants expected the government to increase property stimulus in June to support “reasonable” demand from home buyers and restore market confidence.

By midday, shares of major developer Longfor Group (0960.HK) were up 9.4%, while bankrupt peers Sunac China (1918.HK) and KWG Group (1813.HK) were up 12.8% and 17, respectively. 1% gained, against an increase of 1.2%. % in the benchmark Hang Seng Index (.HSI).

Continental-listed real estate stocks posted modest gains, with the CSI 300 Real Estate Index (.CSI000952) rising 1.5%.

While investors welcomed any move to support the sector, which accounts for a quarter of the world’s second-largest economy, some analysts were skeptical of the real impact, as homebuyer confidence and broader consumer confidence remained weak.

“The general weakness in confidence … is also weighing on real estate sales,” Citi said in a report. “We believe that better economic prospects and stable job expectations are now also necessary conditions for home sales to pick up quickly.”

It expected that fiscal policy could be more effective than expansionary monetary policy.

Last year’s sharp slump in the industry caused developers to default on debt or bonds and halt construction on pre-sold housing projects.

To boost demand, local governments have rolled out hundreds of domestic policies since last year, and central policymakers have taken extensive action in the second half to boost liquidity and stabilize the real estate market.

However, the boost, amplified by the lifting of strict COVID-19 restrictions in December, has proved short-lived.

Real estate investment and sales fell in April as consumers remained cautious about big spending amid concerns over incomes and jobs as the recovery from the pandemic loses momentum.

Investor hopes for further national stimulus warmed again last week following supportive measures from several second-tier cities.

Possible steps include lower down payments and home purchase requirements, as well as refined measures to increase developer liquidity, analysts said.

Zhongtai Securities said a continued rollout of easing measures would help boost demand and market confidence, but could disappoint the market if they fall short of expectations.

“This could be just another Band-Aid for China’s ailing real estate industry,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

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