Longfor Leads China’s Property Stocks Rally as State Loosens Regulations
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Longfor Leads China’s Property Stocks Rally as State Loosens Regulations

Stocks of real estate firms in China jumped on Tuesday after a top regulator lifted a ban on equity refinancing.
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Real estate stocks in China rallied higher Tuesday after the country’s security regulator alleviated restrictions on property firms raising funding in the local market, granting them access to a key source of capital after several years, the Wall Street Journal reported. Longfor and China Vanke were among the best performers, rising 10% and more than 11%, respectively.

Longfor Group and China Vanke Lead the Gains

Shares of Chinese property companies posted sharp gains Tuesday after regulators removed a ban on equity funding for listed companies, providing a massive boost for the embattled sector which has played a pivotal role in the rise of the Chinese economy. The move comes after years of no access to equity refinancing, one of the key sources of capital for real estate firms.

The biggest gainers included Longfor Group and China Vanke, surging over 11% and 10%, respectively. State-backed real estate developer Greenland Holdings jumped more than 10%, while Poly Real Estate and Country Garden soared over 9% and 4%, respectively.

While the ban lift will make it significantly easier for real estate firms to secure fresh funding, the companies still face a difficult task in rejuvenating demand among homebuyers amid the persisting coronavirus restrictions that led to widespread protests this weekend. The demonstrations weighed on global companies that operate in China, such as Apple and Tesla.

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Chinese Stocks in the Green as Authorities Ramp Up Vaccination Efforts

The jump in property developer stocks was triggered by China Securities Regulatory Commission’s decision to widen equity funding channels, including private share placements for companies listed in China and Hong Kong. The move marks the latest Beijing’s effort to shore up its economy and property sector, which has faced challenging headwinds in the form of debt obligations and construction halts. Earlier this year, the mortgage crisis led to nationwide boycotts in China.

Further, the broader stock market in China is also in the green Tuesday after the country’s national health authority said it would accelerate the vaccinations for the elderly people, downplaying the risks of the latest Covid wave. The benchmark Hang Seng Index, which tracks the largest Hong Kong-listed companies, is up over 5%.

The decision highlights the government’s desire to reconsider its stringent zero-Covid policy, one of the biggest hurdles for global investors. The change of heart did not bode well for the US dollar, pushing it down against the majority of major currencies.

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