Chinese property developers rally on expectation of policy easing

 

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Shares of Chinese property developers rally on Wednesday on expectation of more supportive policy measures.

An index tracking mainland-listed developers compiled by Wind Information is gaining 1.8% as of 2:35 pm local time, making it the best-performing sector in the A-share market, compared to the 0.7% loss for the benchmark Shanghai Composite Index. 

Tianjin Realty Development, Metro Land Corporation, Chong Qing Yukaifa, Beijing Zodi Investment are surging by the daily limit of 10%. Beijing Capital Development is jumping 7.5%, CCCG Real Estate Corporation is jumping nearly 6%, Gemdale Corporation up more than 4%.

The PBOC on Tuesday cut the interest rates on MLF and reverse repo and the rate cut came earlier than market expected, sending a clear signal for stepped-up monetary policy easing, CICC said in a note. 

China’s benchmark lending rate LPR is expected to be reduced by on August 21, with 5-year LPR expected to be cut by a larger size than 1-year LPR in order to step up the support to the real estate market, it said. In addition, a 25 bps cut in banks’ reserve requirement ratio (RRR) is expected due to an expected liquidity gap in September due to credit injection and issuance of treasury bonds, it said.

Fuzhou, capital of southeast China’s Fujian province, plans to lower downpayment ratio for some homebuyers to support upgrading-based housing demand, according to state-run newspaper Shanghai Securities News. 

In addition, Xi’an, capital of northwest China’s Shaanxi province, is planning to lower downpayment ratio and the lower limit of home mortgage rates, according to the report.