China's efforts to clear massive inventory by turning unsold homes into affordable housing are unlikely to help cash-strapped developers due to the programme's limited size and potentially low prices, analysts and developers say, Reuters reported. As part of a support package for the crisis-hit property sector, Beijing announced last month a plan for a 300 billion yuan ($41 billion) lending facility, which could result in 500 billion worth of bank financing for local state-owned enterprises (SOEs) to purchase completed and unsold homes.
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As China’s property downturn grinds into a fourth year and house prices continue their downward march, an increasing number of mortgages are slipping underwater, placing fresh financial strain on both households and banks, Bloomberg News reported. Now, with income growth slowing and job losses increasing, people are questioning whether it’s worth the struggle to pay a loan on a property that’s in negative equity. The spectre of negative equity is also concerning banks.
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China Vanke said that it will pay a dollar bond due Friday, the state-backed property developer’s final offshore debt obligation for the year, seeking to calm liquidity concerns amid China’s continuing property crisis, the Wall Street Journal reported. The Shenzhen-based company said late Wednesday that it deposited $612.6 million into unit Vanke Real Estate’s bank account to pay the principal and interest on a $600 million 4.2% offshore medium-term note. The note, issued in March 2019, is the property developer’s third offshore bond due this year.
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A private gauge of China’s services sector signaled the fastest pace of growth in 10 months in May, echoing official data thanks to strong business activity and market demand, the Wall Street Journal reported. The Caixin services purchasing managers index increased to 54.0 in May from 52.5 in April, Caixin Media Co. and S&P Global said Wednesday. The index, which has now stayed in expansion territory for 17 straight months, reached its highest level since July 2023. A reading above 50 suggests expansion, while one below indicates contraction.
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A group of creditors of China South City has filed a lawsuit in Hong Kong against the developer's biggest state-owned shareholder to recover $1.4 billion, according to a court filing and a source familiar with the matter, Reuters reported. The lawsuit is the first such case against a Chinese state shareholder of a developer for recovery of payments owed to creditors under the keepwell provision since the property sector tipped into a debt crisis in 2021.
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A private gauge of China’s factory activity expanded at its fastest pace in almost two years in May, in contrast to the official index’s unexpected slide into contraction, the Wall Street Journal reported. The China Caixin manufacturing purchasing managers index rose to 51.7 in May from 51.4 in April, according to data released Monday by Caixin Media Co. and S&P Global. That is a high not seen since June 2022, said Wang Zhe, senior economist at Caixin Insight Group.
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New home prices in China rose slightly for a ninth month in May, a private survey showed, driven higher by a slew of supportive steps to prop up the nation's crisis-hit property sector, Reuters reported. The average new home price across 100 cities rose 0.25% on month in May, following a 0.27% gain in April, the data from real estate researcher China Index Academy showed on Saturday. China's property sector, a pillar of the economy, has lurched from one crisis to another since 2021 after a regulatory crackdown on high leverage among developers triggered a liquidity crisis.
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China’s property slump has weighed heavily on land sales, drying up a key source of revenue for local governments. Now, authorities are looking at an unconventional way to fill up their coffers: data monetization, The Wall Street Journal reported. The protracted property downturn has hit local governments hard, with many struggling under huge piles of debt. What they also have a lot of is data, such as traffic figures showing how many cars are on the roads and in parking lots.
Foreigners pulled money out of their emerging market portfolios in April on concerns of a tighter monetary policy path in the U.S., with outflows from stocks in India and Indonesia leading the way, data from a banking trade group showed, Reuters reported. The Institute of International Finance data showed net non-resident portfolio flows for April came in at -$0.7 billion, the first monthly outflow since October. The figure compares with net inflows of $30.2 billion in March and a $16.3 billion inflow in April 2023, the IIF data show.
Property firm China Evergrande Group said on Tuesday its liquidators have made only "modest realisations" of the company's assets and were now seeking investors for restructuring, Reuters reported. The embattled developer's "liquidity and other internal resources remain limited," a filing by the company showed.
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