Property shares jumped yesterday after reports that Chinese regulators have instructed state-owned China Bond Insurance to provide guarantees for onshore bond issuance by a few developers including Longfor (0960) and CIFI (0884).
Two of the sources said Longfor has already sold three-year and five-year medium term notes totalling up to 1.5 billion yuan (HK$1.73 billion) with a guarantee from China Bond Insurance.
Financial information provider REDD first reported the plan to provide guarantees for new bond issues by a few select mainland bond issuers on Monday evening.
Its report said policymakers had drawn up a list of half a dozen developers regarded as financially stronger, including Country Garden (2007), whose bond issues would receive guarantees.
Shares of Longfor, CIFI closed up more than 12 percent in Hong Kong while Country Garden rose 9 percent.
Longfor said it is currently communicating with regulators regarding the measures, according to reports from mainland media.
Separately, Longfor said on its official Weibo account that it had filed a complaint with the police regarding a rumor that the developer will go bankrupt by the end of this month, which it said has seriously damaged its reputation.
Meanwhile, the onshore yuan fell to a three-month low yesterday to close at 6.7919 against the US dollar on a weaker economy.
The decline in the yuan came as China's top economic planner said it would plan more polices to stabilize growth and roll them out if needed as economists and state media calling for additional stimulus.
The National Development and Reform Commission will "strengthen pre-emptive policy research, and introduce and implement policies from reserve in a timely manner as appropriate," Yuan Da, an official from the commission, said yesterday at a press conference. He didn't elaborate on what kind of polices the commission is considering.
Meanwhile, in a front-page report yesterday, the central bank backed Financial News said Beijing should introduce new pro-growth policies at the appropriate time to keep growth within a reasonable range, quoting Wen Bin, the chief economist at China Minsheng Bank.
And the Securities Times said that the People's Bank of China's surprise interest rate cuts may be the first in a series of policies to stabilize growth.
In other news, China slashed holdings of US Treasuries for a seventh consecutive month in June amid a domestic economic slowdown and worsening Sino-US ties.
China's stash of US government debt dropped to US$967.8 billion (HK$7.55 trillion) in June, the lowest since May 2010 when it held US$843.7 billion.
Residential buildings under construction in Shanghai. Reuters
