Green light boosts China property stocks

Staff reporter and Bloomberg

Shares of Chinese developers jumped after Chinese authorities said they will allow private equity funds to invest in residential housing, including projects under construction, affordable homes and rental projects in a trial program.

China Resources Land (1109) advanced 2.2 percent to HK$37.7 and China Overseas Land & Investment (0688) increased 1 percent to HK$20.6, though Longfor (0960) decreased 0.2 percent.

In a statement late Monday, the China Securities Regulatory Commission said it will allow private equity funds in the trials to invest in residential housing, including projects under construction, affordable homes and rental projects.

Investment in commercial real estate and infrastructure projects is also allowed under the program.

As part of a sweeping rescue plan since late last year, authorities ended a ban on onshore equity fundraising for builders and widened a program to facilitate local bond sales with government guarantees.

China is stepping up its effort to arrest a property slump, telling banking and securities regulators to help improve the balance sheets of systemically important developers. Home prices steadied in January, ending a 16-month decline after the government expanded stimulus policies for the sector.

Investors in the pilot products have to put in no less than 10 million yuan (HK$11.4 million) and would mainly be institutions, according to the statement.

The regulator did not specify when and where the program would start.