Teetering China property giants undercut Xi’s revival push

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'Any setback in the process will negatively affect the still very fragile market sentiment of almost all players in the sector and defeat the policy purpose,' said Zhi Wei Feng.

Fresh drama at property developers including China Evergrande Group is jeopardising President Xi Jinping’s latest efforts to end the housing crisis.

A Bloomberg Intelligence gauge of Chinese developer shares fell 1.2% on Tuesday, a day after dropping the most this year as the crisis at Evergrande entered a new phase. The developer scrapped key creditor meetings and said it must rethink its debt overhaul plan, raising the risk of a liquidation of the nation’s most indebted builder.

“Property sales this year have been very lackluster, so for most developers accelerating transactions in the two months will be especially crucial,” said Zhang Hongwei, founder of Jingjian Consulting, which advises real estate companies. If sales aren’t good enough by October, local governments will roll out more stimulus, Zhang added.

Thirteen developers from Harbin, the capital of China’s northernmost province, went to the eastern city of Nanjing to promote their 21 projects earlier this month, hoping that buyers fond of traveling would consider them as holiday residences. “Whether tier-one cities will step up loosening depends on how much their housing markets recover,” said Chen Wenjing, associate research director at China Index Holdings. “The Guangzhou move signals that it’s not impossible anymore.”

Former People’s Bank of China policy maker Li Daokui said a recovery may take as long as a year and Beijing should do more to encourage lending to cash-strapped developers.

Source: News Formal (newsformal.com)

 

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