CHINA China boosts equity financing to underpin housing market


China boosts equity financing to underpin housing market


14:45, November 29, 2022

Apartment buildings under construction in Zhengzhou, central China's Henan Province, June 2, 2022. (Photo: CFP)

China's securities watchdog rolled out new measures to facilitate equity financing for real estate firms on Monday, unleashing a "third arrow" to bolster the property market.

Dubbed "three arrows," the latest round of policy tools to support real estate companies includes three financing channels: credit, bonds and equity. Chinese authorities used similar combined measures back in 2018 to ease the financing difficulties encountered by some private enterprises.

The latest measure is intended to improve equity financing. Mergers, acquisitions, restructuring, support for financing, and refinancing will resume for eligible listed companies in the property sector, said a spokesperson for the China Securities Regulatory Commission (CSRC).

Hong Kong-listed real estate firms registered in the mainland will also be able to refinance.

The country will expand the use of Real Estate Investment Trusts, especially in affordable rental housing and infrastructure like warehouses and industrial parks, according to the CSRC. The commission also plans to pilot property-related private equity funds to help firms mobilize real estate assets.

The first arrow, regarding credit financing, was shot last week. The People's Bank of China announced it would provide 200 billion yuan ($27.9 billion) in interest-free relending loans to six commercial banks to guarantee the delivery of property projects, in addition to a special loan arranged in October for the same purpose.

In terms of bond financing, the second arrow, China announced last week that it had expanded its central bank-backed debt financing tools to include private companies' bond financing and property developers.

From January to October, China's banking sector lent 2.64 trillion yuan to property developers, according to the China Banking and Insurance Regulatory Commission.

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