After a dramatic selloff in the previous session, investors flocked to Chinese property developers’ shares and bonds on Tuesday as regulators promised to increase support for the troubled industry.
The Hang Seng Mainland Properties Index (.HSMPI) for Hong Kong increased by 12%, while the CSI 300 Real Estate benchmark (.CSI000952) increased by more than 7%.
The Hong Kong-listed real estate behemoth Country Garden (2007.HK) and its management division Country Garden Services (6098.HK) recovered 15% and 22%, respectively, after falling roughly 9% and 18% on Monday.
The price of Country Garden’s May 2025 dollar bond increased to 21.675 cents on the dollar from Monday night’s 15 cents. Its bond traded in Shanghai increased 25% to 38 yuan, while its bond traded in Shenzhen increased 44% to 33.6 yuan.
China’s top leaders on Monday pledged to ramp up policy support for the economy amid a torturous post-COVID recovery, focusing on boosting domestic demand.
For the property sector, the Politburo, a top decision-making body of the ruling Communist Party, said it is necessary to adapt to significant changes in market supply and demand and optimise property policies in a timely manner.
While few details of the support measures were provided, investors focused on one change in tone in particular, which they thought could mean more property stabilisation steps were imminent.
The Politburo did not mention the oft-repeated phrase “houses are for living in, not for speculation” in the statement after the meeting.
“Most important, (Beijing) sent a signal of further easing property restrictions by dropping the phrase…and mentioning streaming property policies,” Nomura chief China economist Ting Lu said.
Shares of major developers Sunac China (1918.HK) also rose 14% while Longfor Group (0960.HK) rallied 23%. Seazen Group (1030.HK) and KWG Group (1813.HK) both firmed 19%.
Sino-Ocean Group’s onshore bond rose 8.6% to 23.5 yuan in Shanghai. The state-backed firm is currently negotiating with creditors to extend the repayment for the yuan bond due Aug. 2.
While the overall statement by Politburo exceeded low market expectations, analysts said further property easing was unlikely to be large and may simply be on “city by city” basis.
Nomura’s Lu maintained the view that there is no quick fix for the property sector, and that the central government would only marginally ease some existing restrictive measures in large cities.
Morgan Stanley expected policymakers would likely roll out a “more sensible and forceful package” that could include easing second home purchase restrictions in second tier cities.
In recent weeks, investors were wary of a deepening debt crisis in the property sector as new signs of trouble emerged among state-backed property developers Sino-Ocean Group and Greenland Holdings (600606.SS), as well as property giants Country Garden and Dalian Wanda Group.
Reporting by Clare Jim; Additional reporting by Jason Xue in Shanghai; Editing by Sherry Jacob-Phillips and Sam Holmes
