HONG KONG: Shares of Chinese property companies outperformed the broader market on Monday (Mar 7) after Premier Li Keqiang confirmed expectations that more easing in the sector is coming, though only city-specific and not a full-scale relaxation, analysts said.
The Hang Seng Mainland Properties Index reversed morning losses to gain 1.5 per cent in the afternoon, versus a 3.2 per cent drop in the Hang Seng Index.
Country Garden, the nation’s largest developer by sales, jumped 5.6 per cent, while state-owned China Overseas Land & Investment gained 3.7 per cent.
The government will support the commercial housing market to better meet homebuyers’ legitimate needs, and implement city-specific policies to promote the healthy development of the property sector, Li told the annual meeting of parliament on Saturday.
He stressed that China will continue its policy of “houses are for living in, not for speculation” and “stabilisation of land prices, home prices and general market expectation on housing”.
Policymakers will explore a new development model and accelerate the development of the rental market, he added.
Analysts said that while the comment was similar to other official comments in December, the tone was slightly more positive.
“Overall, we believe the government’s property policies stated during the (National People’s Congress) meeting appear to have turned slightly friendly,” Nomura said in a research note.
The investment bank expected that more local governments will introduce property policy fine-tuning measures in the coming month, with potential policy adjustments including reduction of down-payment ratios and marginal removal of home-purchase restrictions.
Citi, who also expected some policy easing in weak cities, said that the top-level tone still focuses on policy continuity, and any fine tuning will take around six months to restore buyers’ confidence.
China’s home sales volume dropped around 40 per cent in the first two months this year compared to a year ago, though home prices gained strength in recent weeks after a deep downturn last year as authorities began easing regulations, including allowing smaller down payments, lowering mortgage rates and cutting the deed tax.
Source: Reuters
