Currently, China plans a property bailout fund as well as special purpose bonds in the market rally. However, sceptics argue that the property sector might be too optimistic. It will somehow lead to China’s property sectors’ debt crisis. The sector fund comprises initial targets for as much as Rmb80bn. This is with much support from People’s Bank of China and China Construction Bank. The final size could generate Rmb300bn, said REDD, the financial information provider.
Moreover, Bloomberg also signalled in the beginning of July that the State Council sets special purpose bond approval. The plans for this approval is around Rmb1.5trn allocated to deal with the property inventories. Due to these reports the Hang Seng Mainland Properties decreased across to sessions for 9%. Plus, there is the biggest price increase from Central China Real Estate’s 6.875%. This is in the Asian high-yield space with around a 9.9-point jump. There is also an increase in the next day for 5.3-pont elaborated Lucror Analytics.
More increases also happen based on the reports that developers started to remit the funds. The overall gain was 25.6 points to a cash price of 95.6. CGS-CIMB Securities, a head of China/HK research, Raymond Cheng gave some remarks. He argued that the bailout fund offers short-term liquidity for developers in order to resume their projects. This fund will increase market sentiment as well as developers’ contracted sales.
However, a lot of participants are still waiting for the further details. Because they believe that the primary purpose of the fund is to let developers finish the unfinished projects. Furthermore, many Chinese homeowners and third-tier cities stopped paying mortgages on unfinished homes, said IFR Asia.
