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Business Times
13 hours ago
- Business
- Business Times
China's inaction deepens peril for struggling property stocks
INVESTORS are growing skeptical that Chinese developer stocks will stage a rebound this year, as Beijing's reluctance to unleash sweeping stimulus deepens pessimism about the sector. A gauge of developers' shares notched its biggest weekly drop in four months after a key meeting on Tuesday failed to yield any concrete measures to revive the industry. Property sales are likely to remain weak in the third quarter, with better-than-expected economic growth data undermining the case for stimulus in the near term, according to Morgan Stanley. A four-year slump in China's property sector is showing few signs of easing after a decline in home prices accelerated in June, and major developers reported lackluster earnings for the first half of the year. That has left investors pinning their hopes on government support to spark a turnaround, with speculation about an aid package fueling the biggest one-day jump in developer shares in five months earlier in July. 'I haven't touched property stocks since 2014 as all the existing housing demand had already been met,' said Sun Jianbo, president of asset manager China Vision Capital. 'Policies can make the real estate slump much milder, but won't give it a chance to recover.' A NEWSLETTER FOR YOU Tuesday, 12 pm Property Insights Get an exclusive analysis of real estate and property news in Singapore and beyond. Sign Up Sign Up The Bloomberg Intelligence gauge of developers' shares has fallen nearly 9 per cent this year to underperform the Hang Seng China Enterprises Index's 23 per cent gain. The real estate index jumped 8.5 per cent on July 10, its biggest one-day advance since February, amid speculation that authorities would roll out supportive measures at the Central Urban Work Conference. But Chinese President Xi Jinping refrained from announcing aggressive stimulus at the event, and instead advocated a more measured approach to urban planning and upgrades. 'Modest policies release won't help much,' said Shujin Chen, head of China financial and property research at Jefferies Hong Kong. 'You'll see some market speculations or rumour that may lead to a temporary stock rally, but later find they're just mostly noises.' Given such dampened expectations, many in the market are pivoting away from the sector altogether. Six of 20 brokers who cover China Vanke, one of the nation's largest builders by contracted sales, have stopped updating research reports on the firm, according to data compiled by Bloomberg. The Shenzhen-based company said earlier this month its loss for the first half of 2025 may reach US$1.67 billion. Meanwhile, Poly Developments and Holdings Group reported a 63 per cent drop in preliminary net income for the first half due to market fluctuations and decreasing profitability of carried-over projects. Shanghai-based real estate firm Greenland Holdings posted a preliminary net loss of 3 billion yuan (S$536.8 million) to 3.5 billion yuan for the period. The firms are among those that have seen multi-year lows in analyst coverage with the latter having none, data compiled by Bloomberg showed. Developers are seeking ways to boost liquidity via asset sales, an extension in bank loans and debt restructuring. The regulator has introduced a requirement for state-owned developers to avoid defaulting on publicly issued debt, but the overall sentiment remains bearish. 'Fundamentally, it's not a sector worth holding,' said Kenny Wen, head of investment strategy at KGI Asia. 'Property sector now has a different, much less important role in China's economy from what it was a decade ago.' But for the bold, there are still pockets of opportunities. JPMorgan Chase & Co. tags the sector as a tactical buy amid growing hopes for further policy support in the coming months. Its fundamental top picks are China Resources Land, China Resources Mixc Lifestyle Services and China Overseas Property Holdings, analyst Karl Chan wrote in a note. The shares of the firms are up at least 8 per cent this year in Hong Kong. Morgan Stanley recommends that investors stay defensive and stick with state-owned enterprises with good visibility, analysts Stephen Cheung and Cara Zhu wrote in a note. High-dividend-yield plays such as C&D International Investment Group and Greentown Management Holdings are among its top picks. C&D's shares are up 26 per cent this year while Greentown has declined 13 per cent. Left with little hope for a broad revival, some investors are rotating out of property and into sectors that offer better earnings upside and stronger policy tailwinds. For Yang Junxuan, a fund manager at Shanghai Junniu Private Fund Management, the property market is 'more influenced by the whole economic backdrop, which is still weak. Compared with property stocks, we're now more inclined to buy military and AI stocks.' BLOOMBERG
Mint
13 hours ago
- Business
- Mint
China's Inaction Deepens Peril for Struggling Property Stocks
Investors are growing skeptical that Chinese developer stocks will stage a rebound this year, as Beijing's reluctance to unleash sweeping stimulus deepens pessimism about the sector. A gauge of developers' shares notched its biggest weekly drop in four months after a key meeting on Tuesday failed to yield any concrete measures to revive the industry. Property sales are likely to remain weak in the third quarter, with better-than-expected economic growth data undermining the case for stimulus in the near term, according to Morgan Stanley. A four-year slump in China's property sector is showing few signs of easing after a decline in home prices accelerated in June, and major developers reported lackluster earnings for the first half of the year. That has left investors pinning their hopes on government support to spark a turnaround, with speculation about an aid package fueling the biggest one-day jump in developer shares in five months earlier in July. 'I haven't touched property stocks since 2014 as all the existing housing demand had already been met,' said Sun Jianbo, president of asset manager China Vision Capital. 'Policies can make the real estate slump much milder, but won't give it a chance to recover.' The Bloomberg Intelligence gauge of developers' shares has fallen nearly 9% this year to underperform the Hang Seng China Enterprises Index's 23% gain. The real estate index jumped 8.5% on July 10, its biggest one-day advance since February, amid speculation that authorities would roll out supportive measures at the Central Urban Work Conference. But Chinese President Xi Jinping refrained from announcing aggressive stimulus at the event, and instead advocated a more measured approach to urban planning and upgrades. 'Modest policies release won't help much,' said Shujin Chen, head of China financial and property research at Jefferies Hong Kong Ltd. 'You'll see some market speculations or rumor that may lead to a temporary stock rally, but later find they're just mostly noises.' Given such dampened expectations, many in the market are pivoting away from the sector altogether. Six of 20 brokers who cover China Vanke Co., one of the nation's largest builders by contracted sales, have stopped updating research reports on the firm, according to data compiled by Bloomberg. The Shenzhen-based company said earlier this month its loss for the first half of 2025 may reach $1.67 billion. Meanwhile, Poly Developments and Holdings Group Co. reported a 63% drop in preliminary net income for the first half due to market fluctuations and decreasing profitability of carried-over projects. Shanghai-based real estate firm Greenland Holdings Corp. posted a preliminary net loss of 3 billion yuan to 3.5 billion yuan for the period. The firms are among those that have seen multi-year lows in analyst coverage with the latter having none, data compiled by Bloomberg showed. Developers are seeking ways to boost liquidity via asset sales, an extension in bank loans and debt restructuring. The regulator has introduced a requirement for state-owned developers to avoid defaulting on publicly issued debt, but the overall sentiment remains bearish. 'Fundamentally, it's not a sector worth holding,' said Kenny Wen, head of investment strategy at KGI Asia Ltd. 'Property sector now has a different, much less important role in China's economy from what it was a decade ago.' But for the bold, there are still pockets of opportunities. JPMorgan Chase & Co. tags the sector as a tactical buy amid growing hopes for further policy support in the coming months. Its fundamental top picks are China Resources Land Ltd., China Resources Mixc Lifestyle Services Ltd. and China Overseas Property Holdings Ltd., analyst Karl Chan wrote in a note. The shares of the firms are up at least 8% this year in Hong Kong. Morgan Stanley recommends that investors stay defensive and stick with state-owned enterprises with good visibility, analysts Stephen Cheung and Cara Zhu wrote in a note. High-dividend-yield plays such as C&D International Investment Group Ltd. and Greentown Management Holdings Co. are among its top picks. C&D's shares are up 26% this year while Greentown has declined 13%. Left with little hope for a broad revival, some investors are rotating out of property and into sectors that offer better earnings upside and stronger policy tailwinds. For Yang Junxuan, a fund manager at Shanghai Junniu Private Fund Management Co., the property market is 'more influenced by the whole economic backdrop, which is still weak. Compared with property stocks, we're now more inclined to buy military and AI stocks.'
Business Times
3 days ago
- Business
- Business Times
China probes US$100 underwriting fee amid Xi price war clampdown
[BEIJING] China is investigating some of the nation's top investment banks over bond underwriting fees that hit below US$100, as regulators expanded a crackdown on a long-standing price war amid broader efforts by President Xi Jinping to curb cutthroat competition. The National Association of Financial Market Institutional Investors (Nafmii) last week launched a probe into the six underwriters of a 35 billion yuan (S$6.3 billion) debt sale by China Guangfa Bank after their fee bids 'drew public attention'. China Galaxy Securities and Industrial Bank charged fees as low as 700 yuan each before tax, Shanghai Securities News reported, citing a release from Guangfa that was later redacted to remove the details. The probe comes just weeks after Nafmii reminded underwriting institutions to refrain from bidding below cost, following years of similar warnings. Brokerages and banks vie for business and better rankings in league tables with low price bids, though the race-to-the-bottom tactics have squeezed their earnings. Such price competition has also plagued sectors ranging from new energy vehicles to food delivery, prompting President Xi to launch a broader campaign to address the practice that's hurting the economy. The price war among underwriters reflects an intensifying trend of 'involution' in the industry, said Wang Chen, co-founder of Belt & Road Origin (Beijing) Tech, a provider of credit-risk analysis. Relevant authorities should further regulate the market and guide bond underwriting services back to rationality, he said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up The combined fees for the six translated into an underwriting fee rate of 0.00018 per cent on the Guangfa notes. While underwriting fees for banks' bonds vary across institutions, the fees have been as high as 0.01 per cent in some cases, according to data compiled by local financial data provider China's two largest brokers Guotai Haitong Securities and Citic Securities are also among those being investigated in the latest round. Nafmii said any violations will be dealt with accordingly. Past penalties by the industry group have ranged from warnings to outright bans on fundraising. The investment banks did not respond to Bloomberg requests for comments. It's not the first time low underwriting fees have attracted scrutiny from Chinese authorities. In 2020, officials probed underwriters for a 0.003 per cent fee charged for a bond by the investment arm of Hainan province. In 2019, the nation's securities regulator issued a rebuke to GF Securities for pricing its services below cost. The brokerage had offered to arrange a top-rated state-owned company's bond sale for a 0.0001 per cent fee, according to sources familiar with the matter at that time. 'Many firms believe that boosting their underwriting rankings is the key to landing future deals,' said Yao Yu, founder of Shenzhen-based YY Ratings. 'Large issuances help institutions grow scale and boost their chances of securing new businesses.' BLOOMBERG
The Sun
3 days ago
- Business
- The Sun
Huawei tops China smartphone market after 4 years amid US curbs
BEIJING: Huawei has surged back to the top of China's smartphone market for the first time in over four years, surpassing Apple and local rivals like Xiaomi, according to data from the International Data Corporation. The Shenzhen-based company secured 18.1% of the market in Q2 2025, shipping 12.5 million units despite ongoing US export controls and economic headwinds. China's overall smartphone shipments declined by 4% year-on-year to 69 million units, ending six consecutive quarters of growth. Arthur Guo, a senior IDC analyst, noted, 'Despite the recent US-China trade truce, the broader economic environment presents ongoing challenges, with consumer confidence remaining subdued.' Huawei's resurgence follows years of US sanctions that restricted its access to critical technologies, pushing the firm to develop in-house solutions. Meanwhile, Apple dropped to fifth place with a 13.9% market share, reflecting weakening iPhone demand in China. The tech giant's rebound highlights its resilience amid geopolitical tensions, though analysts caution that smartphone demand may remain sluggish in the near term. – AFP
Time of India
3 days ago
- Business
- Time of India
China smartphone market reverses to decline in Q2 after six quarters of growth
China's smartphone market contracted in the second quarter after six straight quarters of growth, with shipments declining at four of the top five brands due to weaker consumer demand, IDC data showed on Tuesday. Apple, ranked fifth in China's smartphone market, saw its shipments decline 1.3% year-on-year to 9.6 million units in the second quarter, a smaller drop compared with the 9% decline in the first quarter, thanks to price adjustments made to specific iPhone 16 and 16 Pro variants eligible for government subsidies. Apple's market share rose to 13.9% in the June quarter, up from 13.7% in the March quarter. It was Apple's eighth straight quarter of decline. Huawei reclaimed the top spot after more than four years, with a market share of 18.1%. The Shenzhen-based tech giant shipped 12.5 million phones in the second quarter, down 3.4% year-on-year. Xiaomi, which ranks fourth, is the only smartphone maker to record growth in shipments in the last quarter. Vivo, which ranks second, saw shipments decline 10.1%, the steepest among the top five selling brands. China's smartphone shipments overall dropped 4.0% year-on-year to 69 million units in the second quarter as growth momentum driven by the government subsidies subdued amid broader weakness. "The broader economic environment presents ongoing challenges, with consumer confidence remaining subdued," said Arthur Guo, senior research analyst at IDC. A significant uplift in smartphone demand is unlikely in the immediate term, and the market will navigate a more complex landscape in the second half of the year, he added.
