China Property Stocks Gauge Slides 20% From December Peak
(Bloomberg) — Chinese property shares are on course to enter a bear market as investor optimism from Beijing’s supportive measures over the past few months fades.
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A Bloomberg Intelligence gauge of Chinese real estate stocks listed in the mainland and Hong Kong dropped as much as 1.5% Thursday, extending declines from a December peak to 20% intraday.
While an increase in home sales for the first time in 20 months signals some recovery, buyers remain hesitant to invest in property after its worst downturn. Mixed signals by policymakers are also raising concerns, with Premier Li Keqiang pledging on March 5 to prevent “unregulated” expansion in real estate.
The descent into bear territory follows the nation’s reopening and moves to support developers, which together sent the gauge surging 88% within weeks from an 11-year low in October. China rolled out a 16-point package in November to help embattled real estate companies. It also took steps to get banks to stabilize financing for developers and construction firms.
Other measures taken by local governments include loosening restrictions on housing purchases and lowering mortgage rates and down-payment ratios. The National People’s Congress also took a conservative tone on the real estate market, reiterating the official stance that housing is for living, not for speculation.
Chinese residents remain reluctant to funnel their cash into the property market. The unprecedented housing slump and construction halt have also led to the worst earnings for real estate developers in at least seven years, according to Bloomberg estimates.
(Updates with more context.)
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