UBS issued a report that the Mainland's guiding commercial banks issue a letter of guarantee to replace pre-sale regulatory funds to quality real estate enterprises, arguing that regulatory relaxation has a positive impact on the interior housing industry, especially for Country Garden (02007.HK), thus allowing developers to obtain better cash at the project level.

The Bank examines the cash accounts of the top 15 interior developers (30% market share). Assuming 30% can be withdrawn, RMB 87 billion or 14% of short-term loans may be withdrawn. It is believed that this would be more beneficial for housing enterprises in major low-line cities such as Country Garden. The pre-sale capital aims to cover construction costs, while construction costs are higher in low-line urban project prices compared to first and second cities.

Take Country Garden as an example, assume that 30% of the funds in the custody account can be withdrawn, amounting to RMB21.2 billion, or 29.1% of its short-term debt.