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Four China Developers Given $2.8m Refinancing Approval

China’s securities watchdog has loosened restrictions on the sector’s equity fundraising in a bid to improve liquidity


China property crisis
China's property sector has been hit by an unprecedented credit crunch. But the debt strains now appear to be spreading as home prices fall and the sector is strained by massive debt. Reuters file photo.

 

Four more mainland China-listed property developers have been given the green light to refinance through share placements totalling 19.9 billion yuan ($2.8 billion), in a sign of the regulatory push to improve liquidity in the troubled sector.

China’s securities watchdog has now approved requests from five property companies this month to place new shares worth 28.4 billion yuan, as it lifts restrictions on the sector’s equity fundraising following a debt crisis that erupted in 2021.

Policymakers introduced extensive measures in November to boost liquidity and stabilise the sector, but market confidence remains weak and defaults have continued.

Tuesday’s announcements of fundraising approval came as investors expect Beijing to unveil more stimulus to revive the crisis-hit property market as part of its broader goal of shoring up the economy.

 

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State-owned China Merchants Shekou Industrial Zone was the first to receive such approval on June 16.

The firm had applied to place 8.5 billion yuan of new shares to 35 investors including its controlling shareholder, and said it would use the proceeds on 10 existing residential projects and other debt repayments.

The four other companies which got a greenlight on Tuesday were Shanghai-listed Poly Developments and Holdings and Greattown Holdings, and Shenzhen-listed Hubei Fuxing Science and Technology Co and CCCG Real Estate.

“If the placements are successfully completed, it will help to improve the firm’s cashflow, and restore investment expectations on the market,” said Yan Yuejin, research director at E-House China R&D Institute.

“We expect there will be more stimulus policies going forward to further boost investments and liquidity.”

According to state media, for developers traded on the Shanghai bourse alone, 12 companies have announced plans to seek approval for equity refinancing totalling 40 billion yuan.

 

  • Reuters with additional editing by Sean O’Meara

 

Read more:

China’s Property Sector Will Remain Weak For Years: Goldman

China Urges Patience Amid Calls For More Property Stimulus

Fitch Raises China Growth Forecast But Warns on Property, Trade

China Property Firms Hope to Build on 33% Financing Jump

 

 

Sean O'Meara

Sean O'Meara is an Editor at Asia Financial. He has been a newspaper man for more than 30 years, working at local, regional and national titles in the UK as a writer, sub-editor, page designer and print editor. A football, cricket and rugby fan, he has a particular interest in sports finance.