China Offers Real Estate Stimulus

123jump.com Staff
18 Dec, 2008
New York City

China unveiled another stimulus package focused on low income housing market. The government will lower taxes on capital gains on sales and offer cheaper financing for the second apartment purchase. In Hong Kong, property developers rose and lifted indexes in Hong Kong and in China.

[R]6:00AM New York, 6:00PM Hong Kong - China unveils real estate stimulus package for low income housing and homeownership.[/R]

Hong Kong market averages gained driven by realty stocks as Beijing''s State Council unveiled a real estate stimulus package for low-income housing and home ownership.

In Hong Kong trading Hang Seng Index gained 0.2% or 37.29 to 15,497.81, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, soared 2.2% or 182.80 to 8,555.06. In Shanghai trading CSI 300 Index gained 2.2% or 43.68 to 2,045.10.

Daily turnover on main-board declined to HK$52.2 billion from HK$56.4 billion yesterday.

China Unveils Home Ownership Stimulus

China''s State Council yesterday unveiled a real-estate stimulus package designed for low-income housing and home ownership after an executive meeting of Council presided by Premier Wen Jiabao.

Beijing is targeting to rescue 7.5 million low-income urban families and 2.4 million households living in shantytowns in the next three years, while rural homes will also be renovated.

Under the plan, residences might be sold without business taxes after three years from five years. Taxes on capital gains will be lowered to 5%. China will allow people with smaller-than-average apartments to buy a second apartment under favorable loan conditions.

China also urged lenders to extend financial support to promote mergers and acquisitions amongst leading developers.

Gainers & Losers

Galaxy Entertainment rose 40% on short covering following a 90% drop in stock price. SJM Holdings increased 27.9 % and Melco International Development gained 25.3%.

China Communications Services dropped 5% after Cisco Systems sold 90 million shares at HK$4.36 for each share in the telecom services provider.

HSBC fell 3.4% to HK$81.6 as investors worried about a possible dividend cut at the lender.

Energy stocks fell after crude oil prices dropped $3.54 to $40.10 a barrel despite a record 2.2 million barrels per day production cut by the OPEC. CNOOC fell 5.3%.

Property stocks rose. Sun Hung Kai Properties edged up 3.3%, Sino Land soared 9.3% and Wharf Holdings advanced 8.3%. Guangzhou R&F Properties climbed 13.2%.

Yue Yuen Industrial climbed 11.3% after sales rose 22% in November.

Commodity stocks gained. Maanshan Iron & Steel gained 8.9% after Morgan Stanley upgraded the stock to “overweight” from “underweight.”

ICBC gained 2.8%.

Zijin Mining increased 6.5% after gold prices increased $23.80 to $868.50 an ounce on a weaker dollar.

Wuhan Iron & Steel to pay $180 million for Iron Ore Mine]

Centrex Metals reported today that China''s fourth largest steelmaker Wuhan Iron & Steel will pay $180 million for half a share in Centrex Metal''s iron ore projects in South Australia.

Wuhan Iron & Steel will initially pay $59.5 million in cash after the deal is approved, followed by another $30 million payment a year later.

Wuhan will pay additional $90 million in four tranches after the joint venture iron ore production reaches to 2 billion tons. The remaining $9.5 million will be for a direct 15% stake in Centrex.