In China, the state could financially help the real estate sector, which accounts for a quarter of Chinese GDP. Shares of major Chinese real estate groups took off after the Chinese premier’s announcement.
Investors warmly welcomed Li Keqiang’s remarks. During a ministerial meeting on Friday evening, the Chinese premier pleaded for measures ” that promote the development of a healthy and solid real estate market “, referring in particular to a public fund to bail out promoters in China, without giving details on the provisions envisaged.
On the Hong Kong Stock Exchange, shares of real estate groups CIFI Holdings (Group) and Guangzhou R&F Properties rose 12% and 6% respectively. In Shanghai, Cinda Real Estate, Poly Developers and Gemdale group gained between 3 and 6%.
It is true that large real estate groups are under strong pressure since Beijing launched measures in 2021 to control their level of indebtedness. The pandemic and a wave of defaults, which have hit the sector, have sharply reduced demand. As a result, some groups are struggling to continue their projects. The crisis recently took a new turn with a monthly payment strike. Owners refusing to repay their loans until the work progresses.
The Prime Minister’s announcement therefore brings a glimmer of hope to players in the sector as, for its part, the giant Evergrande tries to conclude a restructuring agreement for its debt estimated at 300 billion dollars.
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