Chinese Property Stocks Gain on Stimulus Measures

By Sherry Qin

Property stocks listed in mainland China gained Friday after Beijing said it would lower minimum down-payment requirements for first- and second-time home buyers and cut rates on existing mortgages to boost its economy and revive its ailing real estate sector.

Stocks of real estate developers, including Poly Developments & Holdings Group and China Vanke, gained 1.6% and 3.1%, respectively.

"Regulators relaxed mortgage policies both earlier and stronger than market expectation," Nomura analysts said in a research note.

Late Thursday, the People's Bank of China and the National Administration of Financial Regulation said the minimum down-payment ratios for first-and second-time home buyers would be 20% and 30%, respectively.

"Policy determination to boost property demand is clear, but policy effectiveness remains to be seen," Citigroup analyst Judy Zhang said in a note.

Separately, big banks, such as Industrial & Commercial Bank of China and Bank of China, have said they would also cut their one-year yuan deposit rate by 10 basis points to 1.55% and their two-year yuan deposit rate by 20 basis points to 1.85%. The banks also plan to cut mortgage rates to boost consumption and aid the troubled property sector.

Investors have mixed reactions to these stocks on worries over the pressure on net interest margins.

Bank of China was down 0.5%, while China Construction Bank was flat.

"Based on our stress test, we view large banks and CMB (China Merchants Bank) as more vulnerable given their higher than peers' mortgage exposure," Citi said.

Write to Sherry Qin at sherry.qin@wsj.com

(END) Dow Jones Newswires

August 31, 2023 23:11 ET (03:11 GMT)

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