Four more Chinese property developers get refinancing approval

Four more Chinese property developers get refinancing approval
A woman walks near a construction site of apartment buildings in Beijing, China, Jul 15, 2022. (File photo: Reuters/Thomas Peter)

HONG KONG: Four more property developers listed in mainland China said they have received approval to refinance via share placements totalling 19.9 billion yuan (US$2.8 billion), in a sign of the regulatory effort to improve liquidity in the embattled sector.

China’s securities watchdog has now approved requests from five property companies this month to place new shares worth 28.4 billion yuan, as it lifts restrictions on the sector’s equity fundraising following a debt crisis that erupted in 2021.

Policymakers introduced extensive measures in November to boost liquidity and stabilise the sector, but market confidence remains weak and defaults have continued.

Tuesday’s announcements of fundraising approval came as investors expect Beijing to unveil more stimulus to revive the crisis-hit property market as part of its broader goal of shoring up the economy.

State-owned China Merchants Shekou Industrial Zone was the first to receive such approval on Jun 16.

The firm had applied to place 8.5 billion yuan of new shares to 35 investors including its controlling shareholder, and said it would use the proceeds on 10 existing residential projects and other debt repayments.

The four other companies which got a greenlight on Tuesday (Jun 27) were Shanghai-listed Poly Developments and Holdings and Greattown Holdings, and Shenzhen-listed Hubei Fuxing Science and Technology Co and CCCG Real Estate.

“If the placements are successfully completed, it will help to improve the firm’s cashflow, and restore investment expectations on the market,” said Yan Yuejin, research director at E-House China R&D Institute.

“We expect there will be more stimulus policies going forward to further boost investments and liquidity.”

According to state media, for developers traded on the Shanghai bourse alone, 12 companies have announced plans to seek approval for equity refinancing totalling 40 billion yuan.