Shares of Chinese property developers experienced a significant rally on Monday, driven by expectations of forthcoming stimulus measures aimed at revitalizing the struggling real estate sector. The Hong Kong Hang Seng Mainland Properties Index and the mainland China CSI 300 Real Estate Index surged to near four-month highs, climbing 4.3% and 6.9% respectively in morning trading.
The surge in stock prices comes amid widespread speculation that the Communist Party Central Committee's Political Bureau is set to discuss loosening property policies at its late-April meeting. Market optimism is further buoyed by hopes for government actions to clear inventory, boost sales, and relax home purchase restrictions.
Notable gains were seen among several private property developers, including Sunac China and the defaulted Shimao Group, along with KWG Group, Zhenro Properties, Fantasia, and Kaisa Group, all of which saw their shares increase by more than 20%. This rally followed a 14% rise in the Hong Kong mainland properties sub-index last week, partly fueled by the China Securities Regulator's plans to support the development of the financial hub's capital market.
In related developments, a Hong Kong court adjourned a hearing to liquidate Kaisa to May 27, granting the Shenzhen-based developer additional time to negotiate restructuring terms. State-backed China Vanke also saw its shares jump significantly in both Hong Kong and Shenzhen markets.
Amid these market movements, concerns about liquidity have led to a sell-off of Vanke's shares and bonds in recent months. The company, scheduled to announce its first-quarter results, has been closely watched by investors.
Despite the optimistic trading, analysts remain cautious about the sustainability of this rally. Mark Dong, co-founder and general manager of Minority Asset Management in Hong Kong, expressed skepticism about the underlying market fundamentals, noting, "For now, we haven't seen any sign of improvement in fundamentals. Property sales are still dropping." He added, "There certainly is hope that the central and local governments will introduce more supportive measures. But apart from more interest rate cuts, other measures, like capital support from local governments, will be quite hard to implement, as we know they are facing restrained resources themselves."
The slowdown in property sales has led to the fastest drop in new home prices in over eight years this March, as ongoing debt issues among developers dampen demand and market outlook. To counter these challenges, Chinese authorities have implemented a series of measures, including easing home purchase curbs and accelerating loan approvals for developers, though many of these policies are considered by analysts to be piecemeal or of limited short-term impact.
JPMorgan analysts have noted that a sustainable rally in the property sector would require not just policy interventions but also a meaningful recovery in sales. As part of these broader market dynamics, CIFI Holdings also announced a significant rebound, with shares increasing by 17% following an agreement with bondholders on an offshore debt restructuring plan, showcasing the complex and intertwined challenges facing the Chinese property sector as it navigates through its current crisis.
