Chinese Property Stocks Surge as Politburo Vows More Stimulus

By Jiahui Huang

Chinese property stocks soared after the country's top policymakers pledged to offer more stimulus for the sector, including further easing home-buying curbs and controlling new housing projects.

Shares of Chinese property developers rose sharply on the mainland and Hong Kong markets. The Hang Seng Mainland Properties Index, which tracks Chinese real-estate developers listed in Hong Kong, rose 15% in Thursday afternoon trading.

Both China Vanke and Poly Developments & Holdings advanced 10% in Shenzhen and Shanghai, respectively. In Hong Kong, Sino-Ocean Group surged 21% and Shimao Group jumped 33%. Sunac China and Longfor Group were up 24% and 25%, respectively. Most Chinese developers were at least 10% higher in Hong Kong.

The gains came after China's Politburo in a meeting Thursday vowed to prevent the property sector from declining further. On top of easing home-purchase curbs further, the government will control the addition of new housing projects.

To help finish existing projects, China's top policymaking body said it will increase lending to developers through a whitelist program. It also pledged to further support the housing inventory digestion, according to a postmeeting communique.

Earlier this week, the People's Bank of China announced its most aggressive stimulus package since the pandemic to boost the flagging economy, including lowering the minimum down-payment ratio for second homes to 15% and cutting rates on existing mortgages by around 50 basis points on average.

"The top central government officials look more resolute and proactive about addressing the real issues in the property market: high inventory, falling home prices and developers' project funding issues," CGS International Securities analyst Raymond Cheng said.

Analysts said they expect top-tier cities such as Beijing and Shanghai to ease home-buying curbs further following the meeting. There could also be a stronger implementation of the policy to buy unsold units from distressed developers, they said.

China may cut rates further, and developers' projects could get more financing support from banks in the future, Cheng added.

The long-awaited pledge of stronger fiscal support for the economy boosted investor sentiment, sending Chinese shares sharply higher. The benchmark Shanghai Composite Index climbed 3.6% to 3000.95, closing above the key 3000 level for the first time since June.

"The stimulus package represents a strategic shift in macro policy, from piecemeal policies to a highly orchestrated package," JLL China economist Bruce Pang said.

Write to Jiahui Huang at jiahui.huang@wsj.com

(END) Dow Jones Newswires

September 26, 2024 04:07 ET (08:07 GMT)

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