Equity Research in HK and Mainland China

Li Tang

Thematic (Sector/Industry)

Vice-Premier Liu He wrote an article in the people's Daily on China's 'dual circulation' strategy on Wednesday in which he noted that the real estate industry influences investment and consumption, and is connected to people's livelihoods and development. Liu's speech maintains existing top-level property policy, but at the same time relates property to investment and consumption, implying that property policy setting could be considered jointly with investment and consumption targets. This suggests a more pragmatic approach towards property policy weighting up risks against growth benefits.
Rumour spread in the market that regulator will tighten the trust funding quota approved due to a risk concern, fears were quick to emerge of a liquidity squeeze for some of China's indebted developer, causing its shares and bonds to tumble. However, in the last week we have seen several cities such as Harbin in last week issuing the policy to support property sales. Those can be seen as policy support for the sector.

Vice-Premier Liu He wrote an article in the people's Daily on China's 'dual circulation' strategy on Wednesday in which he noted that the real estate industry influences investment and consumption, and is connected to people's livelihoods and development. Liu's speech maintains existing top-level property policy, but at the same time relates property to investment and consumption, implying that property policy setting could be considered jointly with investment and consumption targets. This suggests a more pragmatic approach towards property policy weighting up risks against growth benefits.
Rumour spread in the market that regulator will tighten the trust funding quota approved due to a risk concern, fears were quick to emerge of a liquidity squeeze for some of China's indebted developer, causing its shares and bonds to tumble. However, in the last week we have seen several cities such as Harbin in last week issuing the policy to support property sales. Those can be seen as policy support for the sector.

China's Real Estate Sector to Be Tightened

For China regulator, the challenge is to keep the economic ship steady while avoiding creating asset market bubble such as real estate sector. Pan Gongsheng, deputy governor at the PBOC, said last week the central bank would focus on improving the macro-prudential monitoring, evaluating, and alerting systems in key areas including real estate financing.
We believe PBOC liquidity policy object towards real estate is adjusting from a reasonably hands-off approach in H1 to allow the property to support growth to mixed goals: curbing financial risks (developer debt/fast-rising land prices) and still allowing a property to support growth (given macro risks).
There are signs of a more stringent real estate financial regime in Q4 as regulators are seeking more transparency from property developers, calling for more details about current debts, to rein in borrowing costs and quell broader financial impacts.

For China regulator, the challenge is to keep the economic ship steady while avoiding creating asset market bubble such as real estate sector. Pan Gongsheng, deputy governor at the PBOC, said last week the central bank would focus on improving the macro-prudential monitoring, evaluating, and alerting systems in key areas including real estate financing.
We believe PBOC liquidity policy object towards real estate is adjusting from a reasonably hands-off approach in H1 to allow the property to support growth to mixed goals: curbing financial risks (developer debt/fast-rising land prices) and still allowing a property to support growth (given macro risks).
There are signs of a more stringent real estate financial regime in Q4 as regulators are seeking more transparency from property developers, calling for more details about current debts, to rein in borrowing costs and quell broader financial impacts.

China Developer Bond Issuance Still Grow Despite Tightening

<ul class="">
<li>People's Bank of China (PBoC) and Ministry of Housing and Urban-Rural Development (MOHURD) to order large property developers on Thursday(20 Aug )on new financing rules local news reported.</li>
<li>The regulator is expected to take a further step to rein in debt growth among the nation’s property developers, amid signs that a strong housing market recovery has prompted policymakers to refocus on risk prevention.</li>
<li>The new rule is expected to released soon,  it would tighten corporate financing channels for developers, and set restrictions on trust financing, asset management products and overseas financing.</li>
</ul>


People's Bank of China (PBoC) and Ministry of Housing and Urban-Rural Development (MOHURD) to order large property developers on Thursday(20 Aug )on new financing rules local news reported.
The regulator is expected to take a further step to rein in debt growth among the nation’s property developers, amid signs that a strong housing market recovery has prompted policymakers to refocus on risk prevention.
The new rule is expected to released soon,  it would tighten corporate financing channels for developers, and set restrictions on trust financing, asset management products and overseas financing.


China Tightens Domestic Bond Issuance Threshold for Property Developers

We believe that top policymakers have switched China policy priorities from short term growth stabilisation alone to balancing growth with financial risk control . As a result property sector is back to the pre-COVID-19-era as the government continues to clamp down on speculative demand to prevent overheating in the city property market with rapid home price growth. Credit data in July confirm the monetary policy shift towards neutral away from short-term growth stabilisation, with a greater focus on financial risk control.
<ul type="disc">
<li>Improving domestic economy leads to shifting property policy tone</li>
</ul>
<ul type="disc">
<li>National Bureau of Statistics of China (NBS) data shows home prices growth slow in July</li>
<li>Credit data in July confirms policy shift towards neutral</li>
</ul>

 We believe that top policymakers have switched China policy priorities from short term growth stabilisation alone to balancing growth with financial risk control . As a result property sector is back to the pre-COVID-19-era as the government continues to clamp down on speculative demand to prevent overheating in the city property market with rapid home price growth. Credit data in July confirm the monetary policy shift towards neutral away from short-term growth stabilisation, with a greater focus on financial risk control.

Improving domestic economy leads to shifting property policy tone


National Bureau of Statistics of China (NBS) data shows home prices growth slow in July
Credit data in July confirms policy shift towards neutral


China New Home-Price Growth Slows in July

National Bureau of Statistics of China (NBS) data reveals continued broad improvement in May as the resumption of economic activity releases pent-up demand, particularly in China real estate sector.<ul>
<li>China's home prices rose at the fastest pace in seven months in May</li>
<li>Rong 360 data shows that national mortgage lending rate continues to decline in May</li>
</ul>

 National Bureau of Statistics of China (NBS) data reveals continued broad improvement in May as the resumption of economic activity releases pent-up demand, particularly in China real estate sector.
China's home prices rose at the fastest pace in seven months in May
Rong 360 data shows that national mortgage lending rate continues to decline in May


China

China Vanke Co., Ltd. operates real estate development businesses.  The Company provides housing renovation, housing loans, real estate brokerage, and other businesses. China Vanke also operates logistics, material supply, and other businesses.

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China Vanke (000002 CH)

China's Real Estate Sector to Be Tightened

Overall property policies lean towards tightening.The change will constrain highly leveraged developers mostly but providing opportunities for...

Li Tang

China Developer Bond Issuance Still Grow Despite Tightening

The new real estate financial rules have not yet had an impact on developers,China Developer bond issuance still grow despite tightening rule.

Li Tang

China Tightens Domestic Bond Issuance Threshold for Property Developers

People's Bank of China (PBoC) and Ministry of Housing and Urban-Rural Development (MOHURD) to order large property developers on Thursday(20 Aug...

Li Tang

China New Home-Price Growth Slows in July

We believe that top policymakers have switched China policy priorities from short term growth stabilisation alone to balancing growth with...

Li Tang

Signs of a Shift in China Housing Market

National Bureau of Statistics of China (NBS) data reveals continued broad improvement in May as the resumption of economic activity releases...

Li Tang

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