Breathing Room? China may be loosening credit for property sector

CHINA'S BENCHMARK Shanghai Composite Index closed up 0.80% today at 2,490.72, nearly ending above the key 2,500 barrier, thanks to reports of credit loosening measures in the real estate sector.

The Index did breach the mark, hitting 2,501.02 at one point, but failed to protect its position in afternoon trade.

The smaller Shenzhen Composite Index added 1.0% to close at 993.63.

Meanwhile, the Hang Seng Index which tracks Hong Kong's bourse finished up 0.44% at 20,467.43, with developers leading the way as well.

One of the biggest winners on the day was also China's biggest listed developer – China Vanke – which added 5.5% to close at 7.64 yuan, while domestic peer Poly Real Estate was 3.7% higher at 11.84.

China's real estate firms were responding to a report earlier today in the official Securities Times that cited sources in the know as saying that banks in major metropolitan areas would be loosening control over mortgage lending.

The enhanced access to credit applied to China's Tier I cities such as Beijing, Shanghai and here in Shenzhen.

The reported move would be a break from a Cabinet move in April that permitted lenders to suspend mortgages for multiple home purchases a part of the government's strategy to head off speculation in the sector.

Real estate prices in 70 of the country's biggest cities were up 11.4% last month on a year-on-year basis, slower than May's over 12% increase.

For the first time in recent memory, ABC's mammoth IPO was not mentioned as a lag

Financial institutions were also in an upbeat mood after the Central Bank announced yesterday that banks in the country issued over 603 bln yuan in new loans last month, slightly higher than expected.

China Merchants Bank gained 2.1% to 13.91 yuan while and Industrial Bank ended up 1.3% at 25.19 yuan.

The positive sentiment among lenders and developers made its way across the de facto border with Hong Kong, with listed firms in the Special Administrative Region (SAR) taking a cue from their mainland counterparts as well as the Friday upswing in New York.

Recent figures showing a much higher than expected trade surplus for China, up 44% last month versus a year earlier, also provided buoyancy in Hong Kong, one of the more common last stops for Pacific-bound goods.

China Construction Bank was up 2.4% at 6.48 hkd while ICBC added 1.9% to 5.83.

hina Overseas Land rose 4.4% to 16.08 hkd while peer China Resources Land was up 2.2% at 15.86 hkd.

See last week's: Down again, only Greece had worse 1H


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