Summary of Conference Call on China Property Sector Industry Overview - The conference call discusses the **China Property** sector, focusing on potential mortgage subsidies and their implications for the market. Key Points and Arguments 1. **Mortgage Subsidies Speculation**: - Market speculation suggests that China may provide **Rmb400 billion** in mortgage subsidies, potentially effective from early **2026** for purchases made between **September 1, 2025**, and **August 31, 2026**. The subsidy is speculated to be **1%**, with a possibility of up to **2%** in higher-risk areas [1][3][4]. 2. **Impact on Homebuyers**: - The average mortgage rates are currently **3.0%** for first homes and **3.3%** for second homes. With a **1%** subsidy, effective rates could drop to **2.0%-2.3%**, aligning closer to average rental yields of **~1.5%** in tier-1 cities and **~2%** in tier-2 cities. This could reduce monthly payments by **Rmb694-1,143** for homes valued at **Rmb1-2 million**, translating to total savings of **Rmb25,000 to 41,100** over three years [3][9]. 3. **Market Reaction**: - Following the speculation, shares of Vanke surged by **13%**, while Sunac and Jinmao rose by **9%**. In contrast, large-cap SOEs like CR Land and COLI saw only mild increases of **0-1%**, indicating that excitement was primarily driven by short covering rather than strong investor confidence in the policy [1][13]. 4. **Long-term Effectiveness**: - The effectiveness of the subsidies is questioned, as the core issue remains weak expectations for home prices. Secondary home prices have been declining at a rate of **~1.5%** monthly, which could negate the benefits of the subsidies shortly after implementation [4][12]. 5. **Policy Timing**: - The next potential policy window for discussing housing market support is the **CEWC** in the next **1-2 weeks**. If no new narrative emerges, the next opportunity for announcements would be during the **Two Sessions** in **March 2026** [5]. 6. **Retail Sales Impact**: - The mortgage subsidies, if fully utilized, could represent **0.8%** of China's retail sales, suggesting that the savings from mortgage repayments may have a more significant impact on retail sales than on the housing market itself [5]. Additional Important Information - **Historical Accuracy of Speculation**: The historical accuracy of market speculation regarding housing policies has been around **40%**, indicating a level of skepticism regarding the reliability of such forecasts [1][6]. - **Local Subsidy Examples**: Cities like Wuhan and Changchun have already implemented similar subsidies with caps ranging from **Rmb20,000 to 40,000** [8]. - **Share Price Performance**: The report includes detailed share price performance data for various companies in the sector, highlighting the mixed reactions to the speculation [13][19]. Conclusion - The potential introduction of mortgage subsidies in the China Property sector has generated significant market speculation and short-term excitement among investors. However, the long-term effectiveness of such measures remains uncertain, primarily due to ongoing declines in home prices and the need for stronger government commitment to stabilize the market.