Jingu News | The bullish trend of mainland real estate stocks is strong, with Midea Real Est (03990) up 8.56%, China Jinmao (00817) up 4.76%, China Res Land (01109) up 4.64%, Longfor Group (00960) up 4.36%, C&D Intl Group (01908) up 4.42%, Logan Group (03380) up 4.05%, and Cifi Hold Gp (00884) up 3.67%.
On the news front, there are reports citing informed sources that China may reduce the interest rates on existing housing loans as early as September, reducing the borrowing costs for millions of households and stimulating consumer spending. The sources said that some housing loans may be immediately reduced by as much as 50 basis points; commercial banks are making final preparations to welcome the upcoming adjustment in mortgage interest rates.
Minsheng Securities said that currently, the market is concerned about the downward adjustment of interest rates on existing home loans. If the policy is implemented, it will, on the one hand, reduce residents' interest burden, alleviate the phenomenon of 'early repayment' and have a sustained stimulating effect on consumer spending, gradually benefiting the overall economic operation. On the other hand, for the bond market, the price-effect ratio of bonds and loans may also be favorable for the bond market, and the cost-effectiveness of medium to long-term bonds will often be more prominent. The 'asset shortage' situation may deepen further. However, unlike before, with the continuous decline in long-term interest rates breaking new lows this year, one needs to consider both the continuous attention of the central bank to long-term interest rates and the shape of the yield curve, as well as the volatility brought about by corresponding operations. Regarding the adjustment of interest rates on existing home loans, depending on the pace of implementation and the method of operation, attention should be paid to further expectations of market interest rate cuts in the short term, while the medium-term dimension should return to the logic of the fundamentals. As for the easing of the phenomenon of 'early repayment' and the impact on bank interest spreads, further evaluation is still needed.
