China ETFs in Better Shape on Property Support: Can the Rally Last?

In an effort to bolster the struggling property sector and counter its adverse impact on the economy, China has introduced new measures to shore up the ailing sector. These measures have prompted a notable surge in Chinese stocks with particular surge noted in real estate stocks.

The Hang Seng China Enterprises Index logged a substantial gain of up to 3.6% on Sep 4, with prominent property companies such as Longfor Group Holdings Ltd. and China Resources Land Ltd. leading the upward trajectory, per Bloomberg. Notably, shares of the in-focus struggling developer, Country Garden Holdings Co., witnessed a surge of 19% on Sep 4.

Furthermore, Bloomberg Intelligence's developer shares indicator saw a remarkable surge of over 8%. Alongside, the CSI 300 Index, which tracks onshore China shares, also staged a rally.

Heightened Efforts to Address Property Market & Economic Woes

There have been a series of piecemeal measures previously implemented to bolster the housing market that led to limited success. In this latest wave of changes, the Chinese government has lowered the minimum down payment and eased mortgage restrictions for certain homebuyers in major cities like Beijing. Notably, these adjustments have resulted in a surge in home sales in the largest cities over the weekend, following the relaxation of mortgage rules.