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China Developers Rise on Policy Easing Signs: Shanghai Mover

Chinese developers rose in Shanghai trading, extending their biggest weekly gain in more than three months amid signs that the government is easing its property curbs in support of the industry.

A gauge of Shanghai-listed developers closed 1.4 percent higher today, extending this week’s rally to 4.4 percent, the most since the week ended April 19. Xinhu Zhongbao Co., which said it plans to raise as much as 5.5 billion yuan ($897 million) in a private placement to finance two real estate projects, rose by the daily limit. China’s benchmark Shanghai Composite Index was little changed.

Xinhu Zhongbao’s share sale reinforces expectations that regulators will ease limits on fundraising by developers as slowing economic growth spurs adjustments to policies aimed at curbing property prices, according to Ping An Securities Co. China will seek a “stable and healthy” development of the property market, the Communist Party’s Politburo said July 30, the first time this year authorities didn’t mention further tightening of curbs, according to Credit Suisse Group AG and Orient Finance Holdings (H.K.) Ltd.

“The announcement of the refinancing plan has a lot of symbolic significance and will again open up the market’s expectations for a policy shift,” Zhou Yating, Ping An Securities’ Shenzhen-based analyst, wrote in a report, adding that stock sales would help reduce developers’ funding costs. “We recommend that investors actively participate in this round of investment opportunities.”

New Approach

Guangdong Highsun Group Co., a Shenzhen-listed builder of commercial property and mines, also said yesterday it plans to raise 834 million yuan in a private placement of shares to finance construction of an exhibition center in the city of Guangzhou and for working capital. Its shares are suspended from trading.

The country hasn’t allowed developers to raise money by selling shares since 2010, said Dai Fang, a Shanghai-based property analyst at Zheshang Securities Co.

The July 30 statement indicates that top leaders have formulated longer-term property controls that would include increasing housing and land supplies and expanding property-tax trials, CCB International Securities Ltd. analysts led by Edison Bian wrote in a July 31 report. The new policy approach would replace existing curbs that focus on restricting demand such as purchase restrictions, and would benefit developers such as China Resources Land Ltd., they wrote.

Xinhu Zhongbao’s board approved a plan to sell as many as 1.79 billion shares in a private placement for at least 3.07 yuan a share, according to a statement to the Shanghai stock exchange.

The stock, which resumed trading without the right to a dividend of 0.061 yuan a share since July 8, rose to 3.65 yuan today. After adjusting for the dividend, today’s gain represents an almost 10 percent increase from the closing price on July 5, the last trading day before the suspension.

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