(Bloomberg) — Real estate stocks tumbled as China’s pledge to nearly double credit lines for unfinished housing projects to 4 trillion yuan ($562 billion) fell short of market expectations and investors called for stronger policies. It fell.
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The government has set a new year-end target for financing so-called “whitelist” real estate projects, after disbursing 2.23 trillion yuan as of October 16. The measure was aimed at ensuring the completion of housing and was part of a series of initiatives announced. During Thursday’s briefing.
The plan was disappointing, with some analysts calling it “progressive.” Bloomberg’s index of Hong Kong real estate stocks fell more than 8%, while Chinese stocks gave up earlier gains.
Despite Housing Minister Nee Hong and other officials expressing confidence that the government can stem the decline in the real estate sector, authorities face high hurdles in reviving the sluggish stock market rally. are. China’s housing market is starting to bottom out, they added.
“Policymakers are taking a more pragmatic attitude toward the real estate sector,” said Bruce Pang, chief economist for Greater China at Jones Lang LaSalle, adding that the real estate sector is “an important driver of economic growth. “However, it is not a hindrance, but rather will lead to stabilization of economic growth,” he said. Forward,” he added.
The “whitelist” program is part of a top-down plan to ensure unfinished homes are delivered to buyers and prevent another widespread mortgage boycott. Delivering China’s estimated 48 million sold but unbuilt homes will require about 3 trillion yuan in direct funding from the central government, according to Nomura Holdings.
China is also considering whether to allow banks to issue loans to buy idle land and whether to increase affordable housing support for households with two or more children. The government also plans to renovate 1 million old and dilapidated homes in major cities. The move follows the government’s long-standing efforts to renovate slums, albeit on a smaller scale compared to efforts undertaken between 2016 and 2018.
“The market may be disappointed by the lack of concrete figures for special bonds to buy unsold units,” said Raymond Chen, head of China real estate research at CGS International Securities Hong Kong. said.
Thursday’s announcement follows a series of previous measures launched by the central government to help the world’s second-largest economy achieve its target of about 5% growth this year.
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Bloomberg Intelligence says:
The plan is “unlikely to lead entirely to new funding to complete unfinished homes. Despite the whitelist, developer funding from domestic loans fell by 4% by August this year.” .”
-Analysts Christy Han and Monica Shi
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In late September, China announced measures to shore up its troubled real estate sector, including cutting mortgage borrowing costs by up to $5.3 trillion and easing regulations on buying second homes. The initiative is expected to save about 50 million households 150 billion yuan in mortgage costs, People’s Bank of China Vice Governor Tao Ling said at a press conference.
The country had 1.48 million public housing units available at the end of September, enough to meet the needs of 4.5 million young people, Mr. Nee said.
Large cities such as Beijing and Shanghai have expanded the qualifications for homebuyers to purchase real estate. Smaller cities like Tianjin and Chengdu have lifted all purchase restrictions on new homes.
“Equity investors are looking for big headline numbers to drive the stock price higher,” said Beisaan Lin, managing director at Union Bancare Privy. “As long as there is such a discrepancy in expectations, press conferences are bound to be disappointing.”
–With assistance from James Mayger, Ocean Hou, Fran Wang, Jing Jin, Yujing Liu, and Zhu Lin.
(Updated with details and analyst comments.)
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