Shares of Chinese property developers rallied yesterday on hopes that mainland cities will roll out more relaxation measures to boost the embattled sector.
The Hang Seng Mainland Properties Index in Hong Kong jumped more than 5 percent in morning trade, while China's CSI Real Estate Index rose more than 4 percent.
Among new measures, Guangzhou is to allow bigger reductions in home prices - up to 20 percent from 6 percent previously - financial news outlet Yicai reported.
That would be the biggest cut to date by any top-tier city.
Mainland cities have set limits on how much developers can raise or lower their prices. And the leadership in Beijing is wary of big price cuts as it does not want property prices to tumble or for the cuts to trigger protests from previous buyers.
Even so, financial information outlet REDD reported yesterday that President Xi Jinping said in a closed-door meeting in late August that reasonable relaxation policies should be implemented as soon as possible to turn around the housing market.
A credit crunch since last year, triggered by tighter debt cap rules, has pushed some major developers into defaulting on bond payments, and some buyers have threatened to stop making mortgage payments for unfinished projects that were presold.
Also yesterday, Standard and Poor Global Ratings said the sector needs up to 800 billion yuan (HK$897.9 billion) to ensure distressed developers can finish presold homes.
"If falling sales tip more developers into distressed territory things will get worse," S&P remarked.
Elsewhere, Sunac (1918) announced that the company has received additional resumption guidance from the Stock Exchange of Hong Kong.
That comes with Sunac seeking to have a winding-up petition against the company by liquidator Chen Huaijun withdrawn or dismissed.
Sunac noted that it had received a winding-up petition filed by Chen on September 8 and it was seeking legal measures to oppose such an action and was taking all available steps to protect its legal rights.
In other action, Moody's Investors Service downgraded the CIFI Holdings (0884) corporate family rating to B1 from Ba3 and its senior unsecured rating to B2 from B1.
"The rating downgrade reflects CIFI's weakened credit profile driven by its declining property sales and reduced financial flexibility amid the difficult operating and funding conditions in China's property sector," said Cedric Lai, a Moody's senior analyst.
Guangzhou will allow bigger reductions in home prices. AFP
