Benefiting from favorable fundamentals, housing stocks within Hong Kong stocks strengthened collectively in early Monday trading. As of press time,$SUNAC (01918.HK)$,$SHIMAO GROUP (00813.HK)$,$CIFI HOLD GP (00884.HK)$,$COUNTRY GARDEN (02007.HK)$It rose 10%, 6.56%, 3.24%, and 2.6%, respectively.

On November 17, the People's Bank of China, the General Administration of Financial Supervision, and the China Securities Regulatory Commission jointly held a symposium on financial institutions to implement the spirit of General Secretary Xi Jinping's important speech and conference arrangements at the Central Financial Work Conference, and study recent key tasks such as real estate finance, credit investment, and debt risk mitigation on financing platforms.

The conference pointed out that all financial institutions should thoroughly implement the arrangements of the Central Financial Work Conference, treat them equally to meet the reasonable financing needs of real estate enterprises with different ownership systems, and not hesitate to lend, withdraw loans, or cut loans to real estate enterprises that operate normally. Continue to make good use of the “second arrow” to support private real estate enterprises in issuing bonds and financing. Support real estate companies to make reasonable equity financing through the capital market. It is necessary to continue to cooperate with local governments and relevant departments, adhere to the principles of rule of law and marketization, increase financial support for insurance buildings, and promote mergers, acquisitions and restructuring in the industry. It is necessary to actively serve the construction of the “three major projects” such as affordable housing, speed up supply-side reforms in real estate finance, and promote the construction of a new model of real estate development.

How do institutions view this conference?

Guojin Securities pointed out that frequent statements by the supervisory authorities indicate their determination to continue maintaining the stability of key financing channels such as credit, bonds, and equity for housing enterprises. It is expected that in the future, financial institutions' support for real estate industry financing will increase, and more financial policies to support real estate are expected to be implemented.

Yan Yuejin, research director of the Yiju Research Institute, said that the conference was to thoroughly implement the spirit of the Central Financial Work Conference. The participating departments were all core departments or institutions in the financial field. The conference itself made extensive reference to real estate, showing the importance attached to real estate finance work. On the other hand, it also showed the importance and urgency of preventing and mitigating financial risks in real estate. “In addition to the three arrows and the three major projects, supply-side reforms in real estate finance are mentioned. This statement is relatively new, indicating that various financial institutions will take new actions in the real estate field, especially from the perspective of promoting the development of housing enterprises and safeguarding housing demand.”

Li Yujia, chief researcher at the Housing Policy Research Center of the Guangdong Provincial Urban Planning Institute, believes that looking at several measures proposed at the comprehensive conference, there are both short-term measures and long-term measures, and the policy signals are obvious. Currently, policies to stabilize the market from both the supply side and the demand side are increasing financial support. At the same time, the conference proposed the need to “treat real estate enterprises with different ownership systems equally to meet the reasonable financing needs”, which gives private and mixed ownership housing enterprises more confidence.

Sunac China's restructuring will take effect today

In addition to favorable policies, Sunac China has seen significant gains. As of press release, the company has surged nearly 11%.

In terms of news, Sunac China issued an announcement last Friday evening stating that currently the company expects all overseas debt restructuring conditions to be met on or before November 20, 2023, and that the effective date of the restructuring will be November 20, 2023.

Note: Sunac China's announcement

Generally speaking, the fulfillment of all foreign debt restructuring conditions will help reduce debt pressure and optimize capital structure, etc. For example, the approval of Sunac China's overseas debt restructuring will help it optimize its capital structure, reduce the scale of debt, and reduce future liquidity pressure.

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