China Property_ More Funding Support for Inventory and Idle Land Buyback

Summary of Key Points from the Conference Call Industry Overview - Industry: China Property - Date: October 12, 2024 - Analysts: Stephen Cheung, Patrick Jiang, Cara Zhu from Morgan Stanley Asia Limited Core Insights 1. Funding Support for Inventory and Idle Land Buyback: The Ministry of Finance has endorsed the use of special bonds for the first time to buy back completed inventory and developers' idle land. This is expected to enhance inventory digestion and potentially improve market sentiment regarding home prices [1] 2. Tax Regulation Updates: The government is updating tax regulations to eliminate the differentiation between ordinary and luxury housing, which may simplify the market landscape [1] 3. Gradual Funding Implementation: The new funding through special bonds is anticipated to be gradual initially, supplementing the existing Rmb300 billion relending quota. This could facilitate better execution of buybacks due to the longer tenor and reduced involvement of commercial banks [1] 4. Potential Impact on Housing Market: If the policy is executed effectively, it could alleviate bearish sentiments among residents regarding home prices, potentially leading to a softer decline in home prices in the upcoming quarters [1] Additional Important Points 1. Need for More Policy Details: Analysts emphasize the necessity for more details on the policy to accurately assess its fundamental impact on the market [1] 2. Market Sentiment: The anticipated buybacks could reduce housing divestment pressure in the secondary market, contributing to a more stable housing market environment [1] 3. Analyst Ratings: The report includes various stock ratings for companies within the China property sector, indicating a mix of Overweight, Equal-weight, and Underweight ratings across different firms [11] Conclusion The conference call highlighted significant developments in the China property sector, particularly regarding government support for inventory management and the potential for improved market conditions. Analysts remain cautious but optimistic about the implications of these policies on housing prices and market sentiment.