The surge in China property stocks reaches a yearly high amidst the ongoing stimulus rally.
- The surge in shares of most Hong Kong-listed Chinese property stocks is due to the continuation of China's stimulus rally.
- On Wednesday, the Hang Seng Index's largest increase came from the real estate sector.
The surge in shares of most Hong Kong-listed Chinese property stocks is due to the continuation of China's stimulus rally.
The real estate sector experienced the most growth in the year, with Longfor Group Holdings being the top performer, contributing over 25%.
The stock prices of other real estate developers, including Shimao Group and Kaisa Group, experienced substantial increases.
China Overseas Land & Investment surged 12.31% to reach its highest point since September. China Vanke soared 39.6% to its highest since August 2023.
Hang Lung Properties and China Resources Land experienced growth of 10.01% and 10.82% respectively.
While the Hang Seng Index gained 6%, the Hang Seng Mainland Properties Index experienced a significant increase of over 14%. Despite being closed for the Golden Week holiday, Mainland Chinese markets have shown strong performance.
Last Tuesday, the central bank in China announced policy stimulus initiatives, and as a result, major cities in mainland China eased measures to boost homebuyer confidence over the weekend.
Starting Monday, Guangzhou's city government removed all restrictions on home purchases. On Tuesday, Shanghai reduced the required tax-paying period. Shenzhen also relaxed purchasing restrictions, allowing buyers to purchase one more apartment in select districts.
According to a note published by Morgan Stanley on Wednesday, while these measures may help stabilize the property market, increasing prices and reigniting demand will be a challenging task.
The property sector's continued drag will result in a significant shortfall in demand, hindering growth below the target, according to the investment bank's Asia-Pacific economists.
Since 2020, Beijing's crackdown on the real estate sector's excessive debt has led to a prolonged decline in real estate's contribution to China's GDP, which once accounted for over 25%.
Despite increased support from Chinese officials to ease financial burdens on households and stabilize the real estate market, the previous initiatives have not yielded significant improvements.
Markets
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