Vanke, Poly Lead Property Stocks Rally on Speculation Banks Relaxing Curbs

China Vanke Co. and Poly Real Estate Group Co. led developers higher in Shenzhen and Shanghai trading on speculation banks are loosening standards on mortgage lending amid a slowdown in property price gains.

Vanke, the nation’s largest publicly traded developer, climbed 5.1 percent to 7.61 yuan at 11:10 a.m. local time, the most since May 18. Poly Real Estate surged 5.1 percent to 12 yuan. A measure of property shares jumped 3.3 percent, the the biggest gain among the five industry groups on the Shanghai Composite Index, which added 0.6 percent to 2,484.74.

“Over the weekend, more than ten property agents and bank representatives we talked to confirmed that some banks did loosen mortgage lending standards - on a case-by-case basis at least,” Credit Suisse Group AG analysts led by Jinsong Du wrote in a report today.

China’s property prices rose at a slower pace for a second month after April’s record gain as the government cracked down on speculation. Prices in 70 cities added 11.4 percent in June from a year earlier, according to a report today in the statistic bureau’s newspaper, China Information News. That compared with 12.8 percent in April and 12.4 percent in May.

The government may loosen limitations on third-home loans as the curbs reaped their intended effects on real estate, the Southern Metropolis Daily reported, citing Qin Hong, a researcher from Ministry of Housing and Urban-Rural Development.

Bank Denials

Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Bank of China Ltd. denied on July 9 a newspaper report that they resumed third-home mortgages in Shanghai.

The companies are complying with a government order to freeze lending for such purchases, spokespeople for the three banks’ Shanghai branches said in interviews. Some Shanghai-based commercial banks have resumed lending for third-home purchases and eased policies for second-home buyers, the Oriental Morning Post reported July 8, citing people it didn’t identify.

Harvard University professor Kenneth Rogoff said July 6 that a “collapse” in real estate is beginning, while Barclays Capital forecasts prices may fall as much as 30 percent in the next 12 months.

--Chua Kong Ho in Shanghai. Editor: Richard Frost

To contact the Bloomberg News staff on this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net

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