The People’s Bank of China headquarters in Beijing.
Reuters
The Chinese property sector breathed a sigh of relief Friday as the central bank promised support.
The Hang Seng Mainland Properties Index jumped as much as 4.8% before paring gains.
China’s property sector has had a dire year facing heavy debt burdens and low demand.
Chinese real estate stocks won a reprieve Friday as Beijing pledged funding support to help the embattled property sector out of its prolonged slump.
Newly appointed People’s Bank of China governor Pan Gongsheng met Thursday night with executives of eight big developers including Country Garden Holdings, Longfor Group Holdings, and China Resources Land to offer more support.
Gongsheng said measures being proposed by the central bank included bond financing support for the private sector, CNBC reported.
The Hang Seng Mainland Properties Index jumped as much as 4.8% Friday following the first good news for the sector in some time before paring gains. Shares in developers also gained, with Longfor up more than 8%.
China’s property sector accounts for about a fifth of the economy. Its woes held GDP growth in the second quarter at 6.3% compared with the same period last year – well below forecasts of up to 7.1%.
Its headwinds include heavy debt burdens, sluggish demand for new property, and potential homebuyers prioritizing saving instead.
But the long-awaited commitment by the central bank to stimulate the slumping industry is welcome news to developers.
“Under-stressed sectors require more financial help, and that’s the property sector, which is clear,” Zhang Zhiwei, chief economist at Pinpoint Asset Management told Bloomberg on Wednesday.