China relaxing lower limit of mortgage rates a mild positive, not a game changer – J.P.Morgan
China relaxing lower limit of mortgage rates a mild positive, not a game changer – J.P.Morgan

China relaxing lower limit of mortgage rates a mild positive, not a game changer – J.P.Morgan

 

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The Chinese government has relaxed the minimum first-home mortgage rate in some cities and the better affordability is a mild positive, not a game changer, J.P.Morgan said in a note.

The core issue of Chinese developers doesn’t lie in affordability or purchase eligibility, but in confidence, which can only be boosted by economic outlook, home price stabilization and punctual home delivery, according to the note.

The bank stays cautious on the real estate sector, and continued to recommend to bottom fish SOEs, including China Resources Land, China Overseas Land and Investment, Poly Property Services and China Overseas Property Services.

Investors should sell distressed developers and property management companies during stock rebound, including Sunac Services, Shimao Services, Logan Group, KWG Group, Times China, it said. Due to rising market concerns on CIFI Holdings’ liquidity condition, private developers including CIFI, Country Garden and Seazen Holdings may face pressure, it added.