In Shenzhen, China, stocks of Hong Kong-listed Chinese property companies reached their highest levels in over a year amidst continued stimulus efforts from the Chinese government.
The real estate sector led gains in the Hang Seng Index, with Longfor Group Holdings experiencing the largest increase, rising over 25%. Other real estate developers also saw substantial gains. Shimao Group’s shares surged over 87%, and Kaisa Group saw an increase of 40.48%, both marking their highest prices in more than a year. China Overseas Land & Investment’s shares rose by 12.31%, reaching their peak since last September, while China Vanke’s stock increased by 39.6%, its highest since August 2023. Hang Lung Properties and China Resources Land also showed gains of 10.01% and 10.82%, respectively.
The broader Hang Seng Index grew by 6%, and the Hang Seng Mainland Properties Index jumped over 14%. Mainland Chinese markets were closed for the Golden Week holiday during this period.
Over the weekend, easing measures to boost homebuyer confidence were introduced in major cities in mainland China, following a series of policy initiatives from the central bank. Guangzhou’s city government declared the removal of all restrictions on home purchases starting Monday. In Shanghai, the reduction of the required tax-paying period took effect on Tuesday, and in Shenzhen, purchasing restrictions were relaxed, allowing buyers to purchase more apartments in select districts.
Morgan Stanley indicated in a note published Wednesday that while these measures aim to stabilize the property market, raising prices and reviving demand will be challenging. The continued drag from the property sector is expected to result in a significant demand shortfall, keeping growth below target, according to the investment bank’s Asia-Pacific economists.
The real estate sector, which previously constituted over 25% of China’s GDP, has been in decline since 2020 due to Beijing’s crackdown on excessive debt within the sector. Chinese authorities have increased efforts to alleviate financial pressures on households and stabilize the struggling real estate market, but these recent initiatives have yet to yield significant turnarounds.
