ValueBuddies.com : Value Investing Forum - Singapore, Hong Kong, U.S.

China eases credit rules for some property developers
DOW JONES SEPTEMBER 08, 2014 10:45AM

China is easing rules to allow some listed property developers to raise funds in the interbank market, the latest move in a calculated effort to speed up consolidation in the country's fragmented housing market.

China's financial regulators are allowing "well-known, well-established, highly regarded real-estate companies" to issue mid-term notes in the interbank market with fewer restrictions, said two people with knowledge of the matter. Previously, only a small number of property developers, including Shanghai Lujiazui Finance & Trade Zone Development Co. and Shanghai Shimao Co. have been able to issue mid-term notes in the interbank market.

The interbank market, China's major bond market, is where the central government, banks and large enterprises borrow to meet their daily needs, and it offers a relatively cheap and more reliable source of funds than direct loans from banks.

One of the people said the National Association of Financial Market Institutional Investors, which regulates China's interbank bond market, is ready to take applications from the property firms, but no potential bond issuer has moved forward so far. The association didn't return calls for comment.

The biggest developers are the only ones likely to benefit from this credit loosening. China has over 85,000 property developers, and the authorities have been trying to streamline the numbers as part of their economic reforms to make the economy less reliant on property investment for growth. Lenders have also refrained from offering loans or favorable terms to smaller developers. That puts larger developers in a position to snap up smaller ones as they run into difficulties.

"For small developers it might actually have little or few effects initially because the regulation states that it will apply only to a select few," said one of people.

Property developers in China have faced a tighter credit environment since 2010. But this year has been more difficult for them because of declining sales and falling prices as firms grapple with a glut of apartments in many cities outside Beijing and Shanghai. Most developers said in their recent first-half earnings report that their leverage ratios are higher and that profit margins have narrowed as a result.

The guidelines for the relaxation of the credit rules have yet to be finalized. But it will likely reduce the cost of raising capital for the beneficiaries, said Liu Dongliang, an analyst at China Merchants Bank. Interbank loans could be more appealing than more informal sources within China's shadow-banking sector, where many property companies turned after bank loans and more visible sources of lending cleared up. That has spurred worries about hidden time bombs in China's financial system.

Reuters reported that China is relaxing financing rules for listed property firms to sell medium-term notes in the interbank market Wednesday.

Socam Development leads with 30pc price cuts to woo homebuyers in Chengdu

Socam Development joins rush to reduce inventory and boost cash flow before end of peak buying season on the mainland

UPDATED : Saturday, 13 September, 2014, 3:53am

Hong Kong-listed Socam Development has slashed prices at a residential project in Chengdu, Sichuan province, by 30 per cent to speed up sales.

Developers on the mainland are expected to deepen price cuts until the end of next month, with September and October traditionally the best-selling season of the year, to reduce inventory amid a downturn that has lasted almost a year.

"These two months are crucial for developers to hit their annual sales target," said consultancy Shanghai Deovolente Realty. "They face all kinds of pressures to improve cash collection and reduce inventories.

"As the golden month of September has arrived, it now seems widespread for developers to sacrifice prices to boost sales."

Data from consultancy E-House China showed 10 key cities approved 3.18 million sq metres of new property space for sale last week, up 16 per cent from the previous week.

New supply in Chengdu grew 167 per cent week on week to 926,600 sq metres, while the amount in Beijing exploded 218 per cent to 474,700 sq metres.

During this year's Mid-Autumn Festival holiday, which fell on a Monday on the mainland, about 20 residential projects in Chengdu, including those developed by Shimao Property, Evergrande and China Resources Land, cut prices to entice buyers.

Socam cut the price of its project to an average of 7,600 yuan (HK$9,600) per square metre from 10,656 yuan, the National Business Daily reported.

Developers are also cutting prices in other cities such as Beijing, Shanghai and Guangzhou. However, results depend on the extent of discounts as well as the availability and cost of mortgage loans in particular cities.

Official data showed new home sales in Guangzhou fell 35 per cent in the first seven days of this month from a month earlier to 801 units.

"Only price discounts of at least 10 per cent will possibly fetch satisfactory sales performance," said Lu Qilin, the research head of Shanghai Deovolente Realty.

Lu said he expected more developers would offer bigger price cuts in the next few weeks.

Tao Dong, the chief China economist at Credit Suisse in Hong Kong, said in a note property transactions remained low despite the start of the traditional peak sales season this month.

"Developers may face a liquidity crunch as early as the end of this year," he said.

A rising number of mainland developers are coming back to the equity and bond markets to raise funds either to repay maturing debts or to boost working capital for possible acquisitions.

Country Garden Holdings and Yuexiu Property have announced rights issues to raise HK$3.2 billion and HK$3.8 billion, respectively. Powerlong Real Estate Holdings earlier this week raised 1.5 billion yuan through senior notes.

Read more here

==========================================================================================================

"ah lai, lelong lelong, 3 for 10 ah, 3 for 10"

http://www.reuters.com/article/2014/09/1...9A20140918

China's house prices fall further, economic gloom deepens
BY XIAOYI SHAO AND LU JIANXIN
BEIJING/SHANGHAI Thu Sep 18, 2014 6:12am EDT

A woman rides past the headquarters of the People's Bank of China, the Chinese central bank, in Beijing, April 3, 2014. REUTERS/Petar Kujundzic/Files
A woman rides past the headquarters of the People's Bank of China, the Chinese central bank, in Beijing, April 3, 2014.
CREDIT: REUTERS/PETAR KUJUNDZIC/FILES
RELATED NEWS
China house prices fall for fourth straight month as downtrend deepens
analYSIS & OPINION
Authorities seek more AML scrutiny of L.A. fashion district as raid nets cartel-linked targets
MORNING BID — Breaking it down, Fed style
RELATED TOPICS
China »
(Reuters) - Worries that China's economy may be slowing further intensified on Thursday as data showed home prices fell for the fourth straight month, adding to expectations that Beijing will need to do more to stimulate activity.

For now, policy easing is likely to come in the form of help to the most vulnerable sectors, rather than more aggressive steps such as cutting interest rates, but authorities are ready to step in with bolder measures if unemployment rises, policy insiders told Reuters.

China's central bank reportedly stepped in this week to avert any further shocks to the world's second-largest economy.

The People's Bank of China offered to lend $81 billion to big banks to reduce the risk of a credit crunch and a jump in interest rates heading into the long "Golden Week" holidays in early October, when demand for cash typically soars.

Despite the move, short-term lending rates dipped only briefly on Thursday, and traders said borrowing costs will start to rise again soon unless the PBOC continues to pump money into the system, highlighting growing nervousness in the market.

"Chinese authorities will likely introduce more supportive policies, including favorable tax and mortgage policies, before the end of this year to ease the downward pressures on the property market," ANZ economists Liu Li-Gang and Zhou Hao said.

"We thus expect more monetary policy easing in the remainder of this year, if the upcoming data continue to remain lukewarm. We cannot discount the possibility of an outright 50 basis point RRR cut (in bank reserve levels) for the whole banking system, or even a policy rate cut."

Analysts at Barclays were even more certain that policymakers will have to administer stronger medicine soon.

"Interest rate cuts are inevitable," they said in a note to clients, adding that the central bank's decision to lower the yield for its 14-day repos by 20 basis points on Thursday was a sign of the times.

"Today's move sends a clear and strong signal, in our view, that the People's Bank of China is more convinced that it needs to make more effort to guide interest rates lower," Barclays said. It predicted two interest rate cuts of 25 basis points each between October and March 2015.

Lower rates could arrest the cooldown in China's once red-hot property market, where fizzling growth is increasingly dragging on the broader economy, sapping demand for housing-related products from appliances and furniture to cement and steel.

Average new home prices across China fell 1.1 percent in August from July, accelerating from last month's 0.9 percent drop, according to a Reuters weighted home price index calculated from official figures.

Price falls spread to a record number of cities, and further declines are expected as cash-hungry developers cut asking prices and offer bigger discounts to attract buyers. Some economists think the slide will persist well into next year, citing huge inventories of unsold homes.

Four consecutive months of declines in home prices has left China's housing market close to wiping out its gains over the last year, a trend that could further hurt consumer confidence.

The property market accounts for roughly 15 percent of the economy.

"The softness in real estate investment will remain one of the major drags on economic growth," said Zhu Haibin, an economist at JPMorgan.

China's economy has had a bumpy ride this year. A bounce in growth in the second quarter was cut short in July, and data suggest the cooldown may have deepened since.

Stimulus measures announced earlier in the year already appear to be losing their punch.

Growth in factory output slid to a six-year low in August and import demand fell unexpectedly for the second month.

"SO MUCH MONEY"

In addition to government moves to accelerate spending, the PBOC has taken several steps this year to ensure ample liquidity and encourage increasingly risk-averse banks to continue lending at reasonable rates. Many banks still prefer to lend to state-owned firms, starving private companies of capital.

The central bank has declined to comment on the move to inject liquidity into the country's top five banks, via a policy tool known as the Standing Lending Facility, or SLF.

As the SLF is only valid for three months and requires commercial banks to pay for its use, analysts are divided about its impact on the real economy, while acknowledging it gave at least a short-term psychological boost to money markets, where banks lend to each other.

"Our bank is busy this morning lending with so much money in the market now," said one trader at a Chinese commercial bank in Shanghai, following reports that the central bank was offering to inject more money into the system.

Some argue that the extra funds were intended to help banks meet higher demand for cash at the end of each quarter, especially ahead of the long holiday. A flurry of stock market initial public offerings (IPOs) in coming weeks had been expected to amplify those seasonal stresses this year.

Short-term rates stabilized on Thursday, with the seven-day repurchase agreement rate little changed on the day. For the year, the rate has dropped 155 basis points since Dec. 30, though many economists are doubtful that longer-term borrowers are seeing any relief.

Publicly, central bank officials and advisers said China is not poised to unveil any dramatic stimulus to boost its economy.

"The central bank is erring on the side of caution by offering more than it usually would," said the analysts at Capital Economics, in reference to the latest liquidity move.

"Many have been forecasting a turn to broad stimulus in China for some time. The central bank’s injection of liquidity has not changed our view that this remains wishful thinking," they said.

The government's bottom line is stable employment and no widespread debt defaults. Under that scenario, growth of 7.3-7.4 percent this year is seen as acceptable, sources said. Beijing's official target is around 7.5 percent.

(Reporting by Shao Xiaoyi in BEIJING and Lu Jianxin in SHANGHAI; Writing by Koh Gui Qing in BEIJING)

Nanjing scraps housing purchase limit
PETER CAI SEPTEMBER 22, 2014 1:00PM

Nanjing, the capital city of Jiangsu province, has ended its housing purchase restrictions, signalling the latest move by local governments to shore up China’s housing market.

Nanjing municipal government said buyers were no longer required to produce new homebuyer certificates before they could buy homes in the city. There are only six cities left in China -- Beijing, Shanghai, Guangzhou, Shenzhen, Sanya and Zhuhai -- that still restrict people from buying houses.

Floor space sold in Nanjing dropped 34 per cent during the first eight months of 2014.

House prices have declined across the board during the first eight months of the year, including in tier one major cities like Beijing and Shanghai. House prices dropped one per cent in tier one cities last month, an unprecedented result following years of skyrocketing increases.

Govt Raids 13 Hebei Developers After Funding Scheme Collapses

94 people were detained in a growing funding scandal involving real estate developers and private lenders in the northern Chinese city of Handan recently as a slowdown in housing sales exposed risky funding practices.

A report in the official Xinhua news agency today said that government work teams had been sent in to investigate thirteen local real estate developers in the city in southern Hebei province after a total of thirty-two property firms illegally raised RMB 9.3 billion ($1.5 billion) in funding for new projects in Handan.

Read More link below...
http://www.mingtiandi.com/real-estate/fi...collapses/



The "Shadow banking" trust product gives 3.5% per month return (42%/year) and people still invest in it. Even Aussie side was joining in the party. Sounds like the start of China's "lehman" moment.

Hehe, I wonder how much of the Greenland Group and Country Garden funding is support by this type of trust products. All those 2nd and 1st tier city officials who are guilty must be really peeing in their pants now.

From the pics, looks like a pretty convincing "takedown" by the police.

Very high chance China gonna have a couple of "lost decades" like the Japanese did after their stock bubble crash.

Next month FED will end the bond buying. Combined with China slowdown, it will be a double wammy.

==============================================================================================

Another report.
China press report on “full-scale housing collapse in third-tier city”
http://www.forexlive.com/blog/2014/09/22...mber-2014/

Chinese detailed report
http://news.xinhuanet.com/fortune/2014-0...014456.htm

Property drags down China’s economy
PUBLISHED: 26 SEP 2014 15:20:14 | UPDATED: 26 SEP 2014 17:05:08

ANGUS GRIGG Shanghai
On a factory floor in the western Chinese city of Chengdu, steel sheets are stacked two metres high, ready for their final transformation into hot water heaters. It’s a labour-intensive and noisy process that relies on a steady supply of hot and cold rolled steel from nearby mills. Yet there’s no need for a long-term contract.

“There’s so much steel around we just buy it on the spot market,” says the general ­manager of Rheem China, Ching Lee. This has proven a wise call as speciality steel prices have come down 15 per cent over the past two years. “I definitely have the upper hand in that negotiation,” says Lee, who helped establish this factory for the Australian manufacturing icon 20 years ago.

As he takes AFR Weekend on a tour, the former Telstra accountant describes business as “a bit slow” and “lumpy”. There’s been an uptick in recent weeks, he says, although it may not last. “Property developers having trouble selling apartments are throwing in free air conditioners and hot water heaters,” he says. “We’ve just got a big order from a government housing project in [the neighbouring province] of Guizhou. They want 3000 hot water heaters.”

Without meaning to, Lee has neatly summed up the current state of the Chinese economy. Falling raw materials prices – driven by weak demand for steel and an increased supply of iron ore – help manufacturers like Rheem. The only problem, as the economy cools, is finding customers.

REFORM V GROWTH
Speculation this week of a change at the top at the People’s Bank of China alludes to tension between China’s interest in reforming and rebalancing its economy and the trade-off of slower growth. Growth in China has been easing.

In early 2013 the annual growth was 9 per cent. In the first quarter of this year it was 7.4 per cent. The official target is 7.5 per cent but this is in doubt as massive stimulus is eschewed for targeted consumer and small to medium enterprise initiatives. Slowing the rate of economic deceleration is a difficult task, even in a highly controlled economy.

It is the property sector which ultimately determines the economy’s health.

That order – for 3000 water heaters – from a public housing project in Guizhou will ensure Rheem’s 110 factory workers in Chengdu put in plenty of overtime in the coming weeks.

“We will be very busy for the next month,” says Lee. This should translate into better consumer demand from his workers in the short term, although the outlook remains uncertain. Once again this comes back to property.

“China’s property downturn continues to be the main drag on its domestic economy,” says UBS’s China economist Wang Tao.

She uses the word “drag”, as the sector is not in free fall just yet, but Wang and many others believe all the factors are in place for this “bubble” to burst in spectacular fashion.

That is a scenario which only hedge funds can get excited about, as it may precipitate a banking crisis in China and a sharp decline in growth for highly dependent economies like Australia.

POLICY REVERSAL
In an attempt to avoid this, the Chinese government has swung into action over recent weeks and looks to have reversed its previous hardline housing ­policy, while also leaning towards a relaxed monetary policy stance. But it must tread a very fine line, as it is attempting to ­simultaneously prevent growth from ­slowing sharply, while also trying to ­gradually reduce debt levels across the ­economy.
These two aims are not easily achievable at the same time and it looks like the government has for now pulled back on its desire to substantially rein in debt and has made shoring up the housing market its first priority. This week it started encouraging buyers to purchase a second home – a policy reversal that could not be more dramatic.

Just last April, the government tightened rules on those wanting to buy a second home, ordering that a minimum 70 per cent down payment was required.

This was up from the 60 per cent down payment and higher mortgage rates for second home buyers ordered by former Premier Wen Jiabao in early 2011, as he moved aggressively against speculators.

Wen’s rhetoric and regulatory measures largely failed to cool the market and loose credit conditions ensured developers kept on building, even though they were moving well ahead of real demand.

That has resulted in a chronic oversupply of apartments across China, and when credit was tightened earlier in the year saw a sharp drop in home sales and falling prices.

This has clearly spooked the government and on Wednesday the state media reported that rules for ownership of a second home would soon be loosened.

The minimum down payment will likely be cut to 30 per cent in some cities, and those looking to buy a second home might even get a discounted mortgage so long as they have paid off their first property.

“We expect these measures to help ease the property market downturn to an extent, but not reverse the downward trend or drive a visible rebound,” says Wang from UBS.

LOOSER MONETARY POLICY
Policymakers are clearly of the same view, as these easing measures for the property market have been accompanied by a slight loosening in monetary policy.

The People’s Bank of China cut the 14-day repurchase rate by 20 basis points to 3.5 per cent on September 18 and that same week injected 500 billion yuan ($90 billion) of fresh liquidity in the banking system.

Some have speculated that these measures may precede an official interest rate cut, given in September 2008 the inter-bank lending rate was lowered just before the PBOC cut rates.

An official rate cut would be welcomed by most economists, who have been calling for easing measures over the past three months as the economy slowed. Many also believe it is the only way the government can achieve the official growth target and also keep the economy near full employment.

This is the bigger quandary faced by ­policymakers.

While they might be prepared to endure the loss of face associated with missing the annual growth target, keeping people employed is a non-negotiable issue. The always paranoid Communist Party believes any uptick in unemployment will precipitate social unrest and weaken its hold on power. This has led Premier Li Keqiang to hint that broader monetary or fiscal stimulus would be applied if employment was to weaken.

Westpac’s senior international economist, Huw Mckay, says the economy is already well beyond that point and in previous cycles interest rates had been cut by now. This suggests even though higher unemployment levels are a possibility, policymakers remain reluctant to cut rates.

Citing historical data from the Westpac MNI Consumer Sentiment Index, Mckay says the economy needed a rate cut back in June. “Three consecutive declines from those already depressed levels in July, August and September, along with weak official data, provide a watertight case against a return to a neutral policy posture,” he says. “With the maintenance of full employment an obvious threat, selective monetary and (especially) fiscal easing ought to continue.”

He estimates the true growth rate to be around 6.9 per cent at present, based on the bank’s consumer sentiment survey which is nearly 7 per cent below its long run average.

“The survey indicates that the anxieties gnawing away at the Chinese consumer through most of this year remain very much in evidence as the third quarter draws to a close,” Mckay says.

Policymakers are clearly aware of this, but with debt levels across the economy above 200 per cent of gross domestic product they remain reluctant to push the button on any larger stimulus measures. But this could change very quickly at the first sign of factory layoffs or job losses associated with the falling property market.

The Australian Financial Review

BY ANGUS GRIGG
Angus is a China correspondent, based in Shanghai.

@AngusGrigg

UPDATE 2-China takes boldest step yet to lift housing market, economy

Tue Sep 30, 2014 7:20am

By Koh Gui Qing and Xiaoyi Shao

(Reuters) - China cut mortgage rates and downpayment levels for some home buyers on Tuesday for the first time since the 2008 global financial crisis, making one of its biggest moves this year to boost an economy increasingly threatened by a sagging housing market.

The relaxation of lending rules for home buyers was accompanied by steps to increase financing for cash-strapped developers, which may have problems paying their debts if the property downturn persists, as many economists expect..............................................

http://www.reuters.com/article/2014/09/3...IG20140930

Wow that's quite a bit of loosening, i'd be surprised if property doesn't go boom! again

via Xperia Z1 with Android 4.4.4 tapatalk.

BJ, SH, GZ, SZ still got 限购

来自 http://m.thepaper.cn/newsDetail_forward_1269397

国人民银行 中国银行业监督管理委员会关于进一步做好住房金融服务工作的通知

　　为进一步改进对保障性安居工程建设的金融服务，继续支持居民家庭合理的住房消费，促进房地产市场持续健康发展，现就有关事项通知如下：

一、加大对保障性安居工程建设的金融支持
鼓励银行业金融机构按照风险可控、财务可持续的原则，积极支持符合信贷条件的棚户区改造和保障房建设项目。对公共租赁住房和棚户区改造的贷款期限可延长至不超过25年。进一步发挥开发性金融对棚户区改造支持作用；对地方政府统筹规划棚户区改造安置房、公共租赁住房和普通商品房建设的安排，纳入开发性金融支持范围，提高资金使用效率。

二、积极支持居民家庭合理的住房贷款需求

对于贷款购买首套普通自住房的家庭，贷款最低首付款比例为30%，贷款利率下限为贷款基准利率的0.7倍，具体由银行业金融机构根据风险情况自主确定。对拥有1套住房并已结清相应购房贷款的家庭，为改善居住条件再次申请贷款购买普通商品住房，银行业金融机构执行首套房贷款政策。在已取消或未实施“限购”措施的城市，对拥有2套及以上住房并已结清相应购房贷款的家庭，又申请贷款购买住房，银行业金融机构应根据借款人偿付能力、信用状况等因素审慎把握并具体确定首付款比例和贷款利率水平。银行业金融机构可根据当地城镇化发展规划，向符合政策条件的非本地居民发放住房贷款。
银行业金融机构要缩短放贷审批周期，合理确定贷款利率，优先满足居民家庭贷款购买首套普通自住房和改善型普通自住房的信贷需求。

三、增强金融机构个人住房贷款投放能力
鼓励银行业金融机构通过发行住房抵押贷款支持证券（MBS)、发行期限较长的专项金融债券等多种措施筹集资金，专门用于增加首套普通自住房和改善型普通自住房贷款投放。

四、继续支持房地产开发企业的合理融资需求
银行业金融机构在防范风险的前提下，合理配置信贷资源，支持资质良好、诚信经营的房地产企业开发建设普通商品住房，积极支持有市场前景的在建、续建项目的合理融资需求。扩大市场化融资渠道，支持符合条件的房地产企业在银行间债券市场发行债务融资工具。积极稳妥开展房地产投资信托基金（REITs）试点。

　人民银行、银监会各级派出机构要针对辖区内不同城市情况和当地政府对房地产市场的调控要求，支持当地银行业金融机构把握好各类住房信贷政策的尺度，促进当地房地产市场持续健康发展。
　　请人民银行上海总部，各分行、营业管理部、省会（首府）城市中心支行，各省（自治区、直辖市）银监局将本通知联合转发至辖区内城市商业银行、农村商业银行、农村合作银行、城乡信用社、外资银行及村镇银行。来自澎湃新闻m.thepaper.cn

【央视评论】楼市新政：“有限鼓励买房”
http://news.cntv.cn/2014/09/30/ARTI14120...1452.shtml