Shares of Chinese property developers in Hong Kong surged on Thursday following reports that China is contemplating a nationwide plan for local governments to purchase millions of unsold homes from struggling companies, aiming to alleviate the prolonged property crisis.
In early trading, Hong Kong's Hang Seng Mainland Properties Index rose by more than 4%, led by state-backed Sino-Ocean Group, which saw a remarkable surge of 46%. Additionally, defaulted private developers CIFI Holdings and Shimao Group experienced gains of 21% and 18%, respectively.
The surge in Hong Kong's property shares followed mainland China's market movement the previous day, as Hong Kong's markets were closed for a public holiday on Wednesday.
Bloomberg News reported on Wednesday that the State Council is seeking feedback on the preliminary plan from various provinces and government bodies. This move comes after a meeting of the ruling Communist Party leaders emphasized the necessity of addressing the mounting housing inventory.
The CSI mainland real estate index initially spiked by 6% in response to the report, before moderating to a 0.9% increase on Thursday.
According to the report, local state-owned enterprises are expected to assist in purchasing unsold homes from distressed developers at significant discounts, utilizing loans provided by state banks. Many of these acquired properties would then be repurposed into affordable housing units.
China's property sector has been grappling with a debt crisis since mid-2021. Despite waves of policy interventions since 2022, the sector, which accounts for approximately a fifth of the economy, continues to weigh heavily on consumer spending and confidence.
Paraphrasing text from "Reuters" all rights reserved by the original author.
