Source: Bloomberg

Author: John Cheng, Huang Rongrong

Although China's real estate industry is full of storms this year, thanks to the policy "big move" released by Beijing, the market sentiment has changed from extreme pessimism to rejoicing in just a few weeks.However, there are more and more signs that the rise is shaking.

After the cumulative increase of 88%of the six weeks of early December, real estate stocks have entered a technical callback.The prospect of the weak and unclear economic recovery of the buyer's confidence will be stamped with policy support measures. The latter includes incorporating private housing companies into a key bond financing plan and canceling a shares of financing.

"You can't throw all the money in now, because there is a crown disease epidemic, and you must wait for the economic recovery," THU HA Chow, director of the fixed income of Asia, said that the recovery may not be until the second half of next year.Appear.

Thanks to China's re -open prospects and a series of support measures, including 16 measures for the stable and healthy development of the real estate market, real estate stocks have rebounded more than 60%since November.This week, the regulatory agency said that the "backdoor" real estate enterprises that meet the qualified housing companies have been listed, and guided financial institutions to support the reorganization of mergers and acquisitions in the real estate industry, which also boosted the popularity of the market.The degree rose 3.5%, but then he vomited most of the increase.

A high -yield US dollar debt index with real estate debt has also risen by more than 30%, but it will still reach the second largest decline in history.

Based on the Bloomberg index, the market value of China's real estate stocks and bonds has evaporated a total of 74 billion US dollars (about S $ 100 billion) this year.Real estate stocks fell to 11 years.

weak economy

Although the recovery of the market is the rebound of real estate demand, the impact of China's disorderly withdrawal from the new crown and clearing policy is spreading throughout the economy, and the prospect of demand recovery may be suppressed.Analysts have greatly adjusted their predictions on China's GDP (GDP) next year. Some people believe that economic growth will be less than 3%.

The crown disease and depleted land reserves may lead to further reduction in the signing sales of developers next year.Analyst analysts such as Griffin Chan groups predict that sales in 2023 will decrease by 25%, because the reduction of new supply will restore recovery, and the expectations of buyers will need time to reverse.

Investors expect that the government will further relax the policy to boost housing demand, but in view of Beijing's recent reiteration of "houses are used for living, not used for speculation", and the economy is widely weak, the impact of these policies is limited.

Jefferies Financial Group Inc. Analyst SHUJIN Chen predicts that the official will once again relax the restrictions on house purchase restrictions in large cities and reduce the down payment ratio, saying that the possibility of LPR downgrade in the next two months is very high.

The shortage of funds for private developers has not been resolved.The recent series of equity of the equity of the equity of a series of stock distribution and sale of property management subsidiaries shows that liquidity is still tight, and as the offshore credit market becomes too expensive, the financing of high debt developers will have to rely more on bank loans.

Faced with the creditors' meetings, litigation or liquidation threats, the developer of the breach of contract may also go to a large -scale reorganization. China Evergrande expected to disclose the debt restructuring plan by the end of the year.

Winners and losers

After struggling for nearly two years, the Chinese real estate market may be shuffled in 2023, and winners and losers are divided.

"In general, I believe that there will be a positive change, but it will happen to the so -called survivor," said Neraj Seth, the leader of Berlaide Asia.

Loan support may be provided to developers with better financial conditions.Jian Shi Cortesi, director of investment director of GAM Investment Management, said that at the same time, with the acceleration of the integration of the industry, some private developers will go bankrupt or face liquidation, and state -owned developers will receive a market share.

The stock price of state -owned developers such as China's overseas development and China Resources Land recorded a single -digit increase this year, while private developers such as Country Garden and Xuhui fell at least 60%.Property management companies related to real estate enterprises with strong balance sheets, such as China Resources Vientiane Life, are also stronger than the overall section.

At the same time, credit investors are paying close attention to the liquidity of developers and trying to find the survivors in the Chinese debt crisis.An important issue worthy of attention is that when the stock price rises will be transformed into a significant decline in borrowing costs.

Seth reminds that any recovery may take time.

"If a patient who has lived in the hospital for 18 months suddenly received effective drugs, then he would take time to recover," he said."The real estate sector has been suffered for 18 months, and will not change the direction within a month."