Chinese Property Shares Rise Despite Cooler Home Prices
By Bingyan Wang
Shares of Chinese property stocks rose Thursday, buoyed by hopes for more interest rate cuts, despite data showing a further slowdown in China's real estate market.
The Hang Seng Mainland Properties Index rose as much as 4.1% in early trade before paring its gain to 2.4% at mid-day. Hong Kong-listed shares of Sunac China, Logan, Seazen, Country Garden, Longfor and Agile were up between 2.9% and 7.0% at the end of the morning session.
Stocks were boosted early by news that China's central bank cut its one-year medium-term lending facility rate for the first time in 10 months, a move that comes two days after the bank cut its seven-day reverse repo rate. But shares trimmed their gains as the market digested official data showing that Chinese home prices in May fell compared with the same period a year earlier, while both consumption and industrial production, key drivers of the post-Covid recovery, cooled during the month.
"There are some positive catalysts in the property market, [including] rumors of more policy easing and the upcoming rate cut," said Yan Yuejin, research director of Shanghai-based E-house China, referring to expectations that the central bank will cut its benchmark lending rate next week.
Pinpoint Asset Management's president Zhang Zhiwei said in a note that data "so far sent consistent signals that the economic momentum is weakening" and "this explains why the government moved to cut policy rates this week."
Analysts expect more supportive measures in coming months given the central bank's relatively small rate cuts this week.
"It is hard to expect the reduction of the seven-day reverse repo rate to have much effect on economic growth," Xu Gao, chief economist of the Bank of China International, wrote in a note. Barclays economists led by Jian Chang forecast a 60-80 basis points cut in mortgage rates for both new and existing home loans, as well as an additional 30bp cut in policy rates and a 50bp cut in the reserve requirement ratio in the coming nine months.
Write to Bingyan Wang at bingyan.wang@wsj.com
(END) Dow Jones Newswires
June 15, 2023 00:55 ET (04:55 GMT)
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