Developers surge as finance tool expanded to 250b yuan

Bloomberg and staff reporter

China expanded a key financing support program designed for private firms including real estate companies to about 250 billion yuan (HK$270.61 billion), sending shares of developers surging.

Shares of CIFI Holdings (0884) soared by 28.57 percent to HK$0.72, Logan Group (3380) rose by 19.05 percent to HK$0.5, Seazen Group (1030) was up by 17.86 percent to HK$1.98, and Country Garden (2007) ended 13.89 percent higher at HK$1.64.

The National Association of Financial Market Institutional Investors widened the bond financing program to about 250 billion yuan for private companies including developers, the regulator said in a statement, without specifying the previous quota.

The ways to support include bond guarantees, credit enhancement and bond purchases, it said, adding that the move is a part of efforts to stabilize the economy and could be expanded further if needed.

The additional aid came after People's Bank of China deputy governor Pan Gongsheng called for more support for bond sales by private developers last month as distress mounts following record defaults. The broader property crisis has shut most private developers out of the market for bond financing both domestically and offshore.

The statement didn't say how much of bond financing has been supported, or how much aid is meant for developers, but Pan said in 2018 that an initial estimate of the program showed it can support as much as 160 billion yuan in bond sales. He also said back then that the financing tool was not intended for private developers or companies in industries with overcapacity.

The program could help the private sector, but might not be sufficient to completely address the issues real estate companies are facing, said Lu Ting, chief China economist at Nomura Holdings.

"Developers still face mounting bond repayment pressures in coming months," Lu said. "We expect no major policy changes in the property sector until at least March 2023."

Separately, China will promote innovative construction transformations in Beijing, Shenzhen, and 22 other cities, which started yesterday, the Ministry of Housing and Urban-Rural Development said.

The cities will develop smart construction and promote the transformation and development of the construction industry through technological innovation.

Those "intelligent construction pilot cities" are selected based on voluntary application, review, recommendation by provincial authorities, and expert assessment.