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Chinese property shares tanked on Thursday, after measures announced by officials to bolster the flagging real estate market were deemed by investors and economists to be too piecemeal.
After dismal economic data over the summer prompted concern that China may miss its 5% target growth rate, leader Xi Jinping finally decided to go ahead with a much-needed stimulus package, mostly focused on monetary measures, in the last week of September.
Since then, economists have been expecting an additional stimulus package worth up to 10 trillion yuan ($1.4 trillion) to restore bullishness in the world’s second-largest economy. Thursday’s press conference by the Housing Ministry didn’t deliver on those hopes.
“(The) housing supports announced today remain incremental in nature,” Larry Hu, chief China economist at Macquarie, told CNN. “They can help ease the financial distress for developers but may not be enough to stabilize the housing market.”
Investors agreed, sending shares in China’s benchmark CSI300 real estate index down 5%, reversing days of gains. The Shanghai Composite index last traded flat while the Hang Seng index in Hong Kong was half a percent higher, giving up bigger gains from earlier in the day.
During the press conference, the Ministry of Housing and Urban-Rural Development vowed to nearly double bank lending to designated property projects to four trillion yuan ($561 billion) by the end of 2024.
In January, China unveiled a “whitelist” of construction projects, which allowed banks to provide them with loans to help get them to the finish line and into the hands of buyers.
“(We’re) full of confidence in the recovery of real estate market, and we will focus on implementation in the future,” said Housing Minister Ni Hong.