Chinese property developers saw their stocks surge on Tuesday after Beijing policy chiefs pledged to back the crisis-hit sector.
Investors piled into real estate firms’ shares and bonds following a sharp selloff in the previous session, with Hong Kong’s Hang Seng Mainland Properties Index jumping 14.4%, while the CSI 300 Real Estate benchmark gained over 8%.
Property giant Country Garden and its management unit Country Garden Services, both listed in Hong Kong, saw huge rebounds of 18% and 26%, respectively, after shedding nearly 9% and 18% on Monday.
Country Garden’s May 2025 dollar bond firmed to 21.675 cents on the dollar, versus 15 cents on Monday evening. Its Shanghai-traded bond surged 25% to 38 yuan, while a Shenzhen-traded bond rose 44% to 33.6 yuan.
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China’s top leaders pledged on Monday 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 also rose 17% while Longfor Group rallied 25%. Seazen Group and KWG Group firmed 23% and 28%.
Sino-Ocean Bond Rallies
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 August 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, as well as property giants Country Garden and Dalian Wanda Group.
- Reuters with additional editing by Sean O’Meara
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