In-Depth: Real Estate Firms on the Brink—How Can Property Expectations Be Reversed? (AI Translation)
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文｜财新周刊 王婧 程思炜 陈博
By Caixin Weekly's Wang Jing, Cheng Siwei, Chen Bo
在中国内地“五一”长假期间，香港恒生指数到5月3日实现了放量“九连涨”，较1月低位反弹超过20%，市场普遍判断港股已步入技术性牛市；而A股上证指数从4月下旬的3000点左右转头向上，假期前后9个交易日“阳多阴少”，至5月9日拉涨到3155点附近，股指涨幅超过5%。
During the "May Day" holiday in mainland China, Hong Kong's Hang Seng Index achieved a significant "nine consecutive rises" by May 3, rebounding more than 20% from its January low. The market generally judged that Hong Kong stocks had entered a technical bull market. Meanwhile, the A-share Shanghai Composite Index turned upward from around 3000 points in late April. Over the nine trading days surrounding the holiday, gains predominated losses, pushing the index up to around 3155 points by May 9, an increase of over 5%.
A股、港股已低迷下行多时，此番内外联袂、翻红连涨实为近年罕见，核心动力仍在于市场对中国宏观经济走势的看法似有明显修正，开始提振市场信心。
A-shares and Hong Kong stocks have been languishing for a while, but the recent consecutive gains, driven by both domestic and international factors, are rare in recent years. The core momentum still lies in the apparent revision of the market's view on China's macroeconomic trends, which has started to boost market confidence.
外资机构纷纷发表对中国市场的正面看法。法国巴黎银行5月3日的一份研报指出，预期中国股票在7月的中共二十届三中全会之前逐步上涨。该行认为，4月份中央政治局会议透出中国支持增长及推动改革的决心增强，因而将MSCI中国指数的前景展望由基准情境调升至看涨情境（Bullish Scenario）。
Foreign institutions have increasingly expressed positive views on the Chinese market. A research report by BNP Paribas on May 3 indicated that Chinese stocks are expected to gradually rise ahead of the Communist Party of China's 20th Third Plenary Session in July. The bank noted that the April meeting of the Central Politburo underscored China's strengthened resolve to support growth and advance reforms, leading it to upgrade its outlook for the MSCI China Index from a baseline scenario to a bullish scenario.
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- During China's May Day holiday, the Hang Seng Index in Hong Kong saw a significant rise, achieving nine consecutive days of gains by May 3, rebounding over 20% from its January low and entering a technical bull market. Concurrently, the Shanghai Composite Index also showed positive performance, rising to around 3155 points by May 9.
- Positive outlooks on China's market were expressed by foreign institutions like BNP Paribas and UOB Kay Hian, attributing confidence to Chinese government's supportive measures for capital market health and adjustments in real estate policies. These included easing restrictions on property purchases and sales.
- The central government's April meeting highlighted ongoing economic challenges such as insufficient demand and high operational pressures on businesses. It emphasized the importance of real estate as a drag on economic performance while discussing new policy measures to optimize housing supply and demand.
During the "May Day" holiday in mainland China, Hong Kong's Hang Seng Index and the Shanghai Composite Index saw significant gains, with the former entering a technical bull market after rebounding over 20% from its January low. The latter rose by more than 5% to approximately 3155 points by early May [para. 1]. This resurgence in both A-shares and Hong Kong stocks is attributed to domestic and international factors, including revised positive outlooks on China's macroeconomic trends which have boosted market confidence [para. 2].
Foreign institutions like BNP Paribas and UOB Kay Hian have expressed optimistic views on Chinese stocks, influenced by China's reinforced commitment to support growth and advance reforms as indicated in recent high-level meetings [para. 3][para. 4]. These sentiments are further bolstered by anticipated adjustments in real estate policies, highlighted during U.S. Treasury Secretary Janet Yellen’s visit and subsequent Politburo meetings which discussed new measures for the real estate sector aimed at reversing the economic downturn experienced over the past two years [para. 5][para. 6].
The real estate sector has been a significant drag on China’s economic performance, with national unsold commercial housing reaching a record high. However, recent government meetings have signaled comprehensive reforms and potential policy initiatives aimed at reducing real estate inventory and stimulating market recovery [para. 7][para. 8]. This includes lifting purchase restrictions in several cities and introducing trade-in programs to stimulate sales of new homes [para. 9].
Despite these efforts, challenges persist as nationwide sales of commercial housing continue to decline. Various localities have implemented numerous policies with limited success, often resulting only in temporary recoveries [para. 10]. Additionally, foreign investors' focus remains closely tied to how China will adjust its real estate policies moving forward [para. 11].
The ongoing slump in the real estate market has also had broader macroeconomic implications. It has significantly impacted local fiscal revenues heavily reliant on land sales related to real estate. With nearly 40% of national fiscal revenue derived from this sector, local governments face increased financial difficulties amid declining property sales [para. 12]. This situation is exacerbated by a general decrease in consumer confidence and spending within the country [para. 13].
In response to these challenges, some regions are exploring innovative solutions such as establishing a national real estate platform company tasked with acquiring unfinished buildings or inventory homes across various regions. This initiative aims to revitalize these assets potentially as affordable housing units available for sale or rent [para. 14].
Overall, while there are proactive measures being taken to address the issues within China's real estate market and broader economic landscape, significant challenges remain. The effectiveness of these initiatives will be crucial in determining the trajectory of recovery for both the real estate sector and the wider economy [para. 15].
- BNP Paribas
法国巴黎银行 - BNP Paribas, a French bank, issued a research report on May 3 predicting that Chinese stocks would gradually rise before the CCP's 20th Third Plenary Session in July. The report highlighted China's commitment to growth and reform, as indicated by the April Politburo meeting, leading BNP Paribas to upgrade its outlook for the MSCI China Index from baseline to bullish scenario.
- UOB Kay Hian
大华继显 - UOB Kay Hian, a brokerage firm based in Singapore, mentioned in the article that the Hang Seng Index and MSCI China Index rose by 7.4% and 6.4% respectively in April. This reflects renewed investor interest in Chinese stocks following the Chinese government's supportive statements for healthy capital market development and backing Hong Kong's status as an international financial center. Additionally, adjustments to real estate policies were noted as a contributing factor.
- Morgan Stanley
摩根士丹利 - Morgan Stanley, an American investment bank, analyzed in a presentation on May 5 that the Chinese government is exploring ways to accelerate the de-stocking of the real estate market. Possible measures include further lifting purchase restrictions, loosening price controls, stimulating new home sales through "trade-in" programs, and government acquisition of unfinished projects to convert them into affordable housing.
- Guojin Securities
国金证券 - Guojin Securities, in a research report published on April 30, reviewed the history of China's real estate inventory issues. It highlighted that after hitting a peak in February 2016, real estate inventory levels rapidly declined due to relaxed policies, reaching a near-decade low by November 2019. The firm anticipates further top-down measures to balance real estate supply and demand and reduce inventory, predicting these actions could have historically significant impacts on the industry.
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