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Monday, 23 February 2009
China Property sector next to get stimulus shot
Beijing will issue its tenth industry-specific stimulus plan for the property sector instead of the energy sector, a former vice-chairman of the Standing Committee of the National People’s Congress said.
Beijing will issue its tenth industry-specific stimulus plan for the property sector instead of the energy sector, a former vice-chairman of the Standing Committee of the National People’s Congress said.
Cheng Siwei, the dean of the management faculty of Graduate University of the Chinese Academy of Sciences, was quoted by Nanfang Daily as divulging the plan on Saturday in a seminar organised by the university on how the mainland should cope with the financial crisis.
“Originally, energy was the tenth sector to be included in the 10 stimulus plans, but finally it was replaced by property, which shows its prominence in the central government’s priorities,” he was quoted as saying.
Analysts said the news could bolster the share prices of mainland property stocks, especially those with the heaviest debt load.
But some said further measures to boost demand for properties may not do much to help developers as a series of such measures have already been introduced, adding financial assistance to developers would provide the biggest help to the sector.
“Beijing has already implemented quite a lot of policies to help push more people to buy properties,” said Conita Hung Lai-ping, the head of equity research at Delta Asia Financial. “Additional similar measures may not help much more ... I think policies to help relieve developers’ financial stress will be more pertinent.”
Adrian Ngan Wai-hung, an executive director of the research department at CCB International Securities, concurred, saying it will take some time for measures already implemented to spur property sales and digest inventory in the market as consumers expect prices to fall further.
In recent months, Beijing extended preferential loan conditions enjoyed by first-time buyers to those buying second flats, cut various taxes on property sales and allowed local governments more policy flexibility to boost flagging property sales.
Still, developers suffered from tight cash flows as banks reduced credit and the equity market’s collapse killed fresh fund-raising.
“I think if developers, especially small and medium ones, can raise funds by issuing bonds, it would be a great help,” Mr. Ngan said.
Timothy Fung, the vice-president of equity research at Credit Suisse Private Banking, said the central government might still consider implementing a more nationally co-ordinated policy on tax cuts for property purchases and lower initial deposit requirements for buyers.
Mr. Ngan expects mainland property prices to fall a further 10 per cent this year and does not see a recovery until the second half.
Mr. Fung said energy stocks might not be hit hard by the latest news.
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Property sector next to get stimulus shot
Eric Ng
23 February 2009
Beijing will issue its tenth industry-specific stimulus plan for the property sector instead of the energy sector, a former vice-chairman of the Standing Committee of the National People’s Congress said.
Cheng Siwei, the dean of the management faculty of Graduate University of the Chinese Academy of Sciences, was quoted by Nanfang Daily as divulging the plan on Saturday in a seminar organised by the university on how the mainland should cope with the financial crisis.
“Originally, energy was the tenth sector to be included in the 10 stimulus plans, but finally it was replaced by property, which shows its prominence in the central government’s priorities,” he was quoted as saying.
Analysts said the news could bolster the share prices of mainland property stocks, especially those with the heaviest debt load.
But some said further measures to boost demand for properties may not do much to help developers as a series of such measures have already been introduced, adding financial assistance to developers would provide the biggest help to the sector.
“Beijing has already implemented quite a lot of policies to help push more people to buy properties,” said Conita Hung Lai-ping, the head of equity research at Delta Asia Financial. “Additional similar measures may not help much more ... I think policies to help relieve developers’ financial stress will be more pertinent.”
Adrian Ngan Wai-hung, an executive director of the research department at CCB International Securities, concurred, saying it will take some time for measures already implemented to spur property sales and digest inventory in the market as consumers expect prices to fall further.
In recent months, Beijing extended preferential loan conditions enjoyed by first-time buyers to those buying second flats, cut various taxes on property sales and allowed local governments more policy flexibility to boost flagging property sales.
Still, developers suffered from tight cash flows as banks reduced credit and the equity market’s collapse killed fresh fund-raising.
“I think if developers, especially small and medium ones, can raise funds by issuing bonds, it would be a great help,” Mr. Ngan said.
Timothy Fung, the vice-president of equity research at Credit Suisse Private Banking, said the central government might still consider implementing a more nationally co-ordinated policy on tax cuts for property purchases and lower initial deposit requirements for buyers.
Mr. Ngan expects mainland property prices to fall a further 10 per cent this year and does not see a recovery until the second half.
Mr. Fung said energy stocks might not be hit hard by the latest news.
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