China Overseas, Sunac Climb After PBOC Cuts Mortgage Payment

  • Chinese central bank cuts minimum down payment to 25% from 30%
  • China Overseas shares rise almost 10%, Sunac stock climbs 8.2%

Chinese property developers surged after the People’s Bank of China cut the minimum down payment for first-time home buyers in cities without purchase restrictions.

The BI China Real Estate Owners and Developers index rose more than 2 percent at 11:05 a.m. in Hong Kong, led by China Overseas Grand Oceans Group Ltd. and China Resources Land Ltd., which rose 10.5 percent and 8.5 percent, respectively. Sunac China Holdings Ltd. surged as much as 8.4 percent in Hong Kong trading, the biggest intraday increase since July 9.

The Chinese central bank cut the minimum down payment for buyers in cities without purchase restrictions to 25 percent from 30 percent, according to a statement released on its website Wednesday. The previous requirement had been in place since 2010, when the government boosted the ratio from 20 percent to help curb property speculation.

“The down payment cut is mainly to boost the weak economic growth and property de-stocking in low-tier cities,” Jeffrey Gao, a property analyst at Nomura Holdings Inc., wrote in a note to clients on Friday.

The cuts will boost home sales in the fourth quarter, because almost 80 percent of homebuyers use mortgage loans, and 85 percent of national sales are from cities without restrictions, Gao wrote.

Among other developers, China Vanke Co. rose 5.8 percent and Evergrande Real Estate Group Ltd. advanced 5.2 percent.

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