China developers rise as banks are urged to tackle mortgage crisis

THE shares of Chinese developers jumped by the most in nearly a month following a report that the nation’s banking regulator has urged lenders to support the sector amid a growing mortgage boycott.

A gauge of Chinese real estate firms gained 3 per cent on Monday (Jul 18) to snap a 5-day decline. Top performers included KWG Group Holdings Ltd and Guangzhou R&F Properties Co, which were up at least 9 per cent in Hong Kong. The city’s benchmark Hang Seng Index gained 2.7 per cent, led by property shares.

The slump in property stocks has been a key driver of the recent market downturn, as traders feared a broader contagion from the ailing sector. Investors got some relief after local media reported the China Banking and Insurance Regulatory Commission has asked lenders to provide credit to eligible developers so they can complete halted projects.  

The authorities also urged banks to meet legitimate funding demands to support deals and help stabilise the market, the report added. Still, investors will be looking for more concrete steps to alleviate stress in China’s heavily battered property sector, which is still reeling from defaults among some of the biggest builders. 

Despite Monday’s rally, China’s property shares remain down more than 10 per cent in July.   BLOOMBERG