Source: Wall Street News

Stimulated by successive policies and favorable policies set by the central government, hundreds of real estate stocks collectively flourished on July 25, marking one of the biggest gains in real estate stocks since this year.

By the close of trading on July 25, the WIND real estate index had surged more than 5%. In the A-share market, Jinke, Xincheng, Binjiang, Zhongnan Construction, etc. had risen more than 10%, and Jindi, Rongsheng, Huafa, Poly, Vanke, China Merchants Shekou, and CCCC Real Estate had risen more than 7%.

In terms of Hong Kong stocks, the stock prices of housing enterprises, especially private housing enterprises, were booming, with an increase of 25.58%. The market capitalization rose by HK$23.9 billion a day, breaking the 100 billion mark, reaching a total market capitalization of HK$117.7 billion; Zhongjun Group, Longguang, Country Garden, Agile, Sunac China, R&F, and Yuexiu Real Estate ranged from 19.23%-14.29%.

Property stocks also rose collectively. Country Garden Services led the way. By the close of trading on July 25, stock prices had risen by more than 26.45%. Shares such as Xincheng Yue Service, Everything Cloud, Sunac Service, and Elegant Life Service all increased by more than 14.51%.

Zhang Dawei, chief analyst of Central Plains Real Estate, said that the infatuation with real estate stocks is mainly due to the latest developments in real estate at the Politburo meeting of the CPC Central Committee.

On July 24, the Political Bureau meeting of the CPC Central Committee pointed out that it is necessary to effectively prevent and mitigate risks in key areas, adapt to the new situation of major changes in the supply and demand relationship in China's real estate market, adjust and optimize real estate policies in due course, make good use of the policy toolbox according to city policies, better meet residents' rigid and improved housing needs, and promote the stable and healthy development of the real estate market.

Li Yujia, chief researcher at the Housing Policy Research Center of the Guangdong Provincial Urban Planning Institute, analyzed that the latest statement of the central government did not mention “do not exaggerate housing,” but proposed “adjust and optimize real estate policies in a timely manner and make good use of the policy toolbox according to city policies.” It exceeded market expectations. It is expected that there will be more vigorous actions in policy relief in the future, so there is a sentiment that market capital will increase too much.

Zhang Dawei even said bluntly that “everyone is now waiting for a policy.”

In fact, apart from the latest statement made by the central government, in the past two months, favorable developments in the real estate market have been spreading frequently, and the implementation of financing has accelerated.

Following the registration of the first batch of five real estate companies' “third arrow” applications by the Securities Regulatory Commission in June, Zhongjun Group received multiple batches of term loan financing of HK$255 million and US$89.1 million from overseas syndicates, which are intended to be used to pay off debts. On July 10, Xinhu Zhongbao issued a winning ticket of 700 million yuan, guaranteed by China Debt. This is a private housing enterprise issuing a debt with increased support from China Debt after a lapse of two months.

On July 20, eight housing companies, including Country Garden, Xincheng, Vanke, Huafa, Beijing Investment Development, and Shanghai Zhangjiang Group, announced that they would issue or plan to issue new bonds on the same day. The total amount of debt issued was about 20 billion yuan.

In addition to this, there is also a wave of warm air on the policy side.

On July 10, the People's Bank of China and the State Administration of Financial Supervision and Administration extended the adaptation period to the “Financial Rules 16” policy of encouraging a reasonable extension of stock financing and providing financing support to secure public buildings until December 31, 2024. The policy side has set the tone to give more housing enterprises, especially private housing enterprises, room for sales and credit repair.

This also means that at a time when financing for housing enterprises is getting cold and the monthly issuance scale continues to hit a new low, housing enterprises, especially private housing enterprises, are finally waiting for signs of improvement that have been lost for a long time.

Moreover, on July 14, 12 private enterprises, including New Hope, Xincheng Holdings, and Country Garden, attended the private enterprise financing symposium organized by the China Interbank Market Dealers Association. The Association of Dealers stated that it will continue to push forward the “second arrow” work, specifically naming it to continue to support private housing enterprises' bond financing. On the same day, the central bank also stated that it would encourage commercial banks to solve the problem of relatively high interest rates on existing mortgages.

The pressure on housing enterprises to operate is also lessening.

On July 11, Wang Jianlin, the richest real estate company with an anti-gambling agreement and a heavy IPO, ushered in a resuscitation. Wanda Wanda Commercial Management, the listed entity of Wanda Commercial Management, was frozen for 24 hours, and 5.07 billion shares worth more than 120 billion yuan of shares were unfrozen overnight; on July 13, Wang Wenxue, former Hebei Shoufu and chairman of Huaxia Happiness, “came back to life”, and Huaxia Happiness completed a 219.2 billion yuan domestic and foreign debt restructuring case at present; in late July, Zhang Li, the co-chairman of R&F Real Estate in the US bribery case, finally returned home after a lapse of half a year. According to R&F, it has signed an agreement to suspend the prosecution.

Looking forward to the future, it is expected that the national team's support for housing enterprises will continue to increase.

Zhang Dawei said that if the market is to stabilize, it is definitely necessary to start with Tier 1 and 2. Overall, policy content is getting wider and stronger, and it is expected that there will be stabilization policies for Tier 1 and 2 cities, including recent favorable policies such as urban village renovation in major megacities.

After more than two years of industry risk clearance, real estate bosses such as Lin Tengjiao, Huang Qisen, and Yang Keng have withdrawn from the capital market and gradually moved away, but those housing enterprises and new real estate bosses who insisted on maintaining their reputation and surviving are coming out of their darkest hour, and it is hoped that with the support of the national team and domestic and foreign banking groups, more light will come.

Editor/Jeffrey