Over recent months, China’s leading real estate developers have benefited from plentiful liquidity, rising property prices and surging revenues. The good times appear set to continue.
China’s leading real estate developers have been increasing their investment in major (luxury) residential, retail/hotel and commercial projects outside the country.
Hong Kong-listed H-shares fell by just over one-fifth from the beginning of 2013 to their recent low on June 25, meeting the widely accepted definition of a bear market. The advances made by H-shares in the last few days mean that they have now regained half the ground that they had previously lost since the end of last year. We think that this is the result of three positive factors.
At a time that A-shares generally have performed poorly, a number of ‘star’ mutual funds that are focusing on consumer stocks have delivered double-digit returns. The individual stocks that have contributed to the strong outperformance come from a wide variety of industries. What these stocks have in common, though, is that they are natural beneficiaries of rising consumption and consumerism in China – a secular trend that has a lot further to run.
One of China’s four largest property developers, Vanke (000002:SZ), announced on July 16 that it would set up a $2bn medium-term note programme in Hong Kong through Vanke Real Estate (Hong Kong), its Hong Kong-based offshore investment holding company. We think that the planned issues are set to mark a ramp-up of overseas fundraising by Chinese developers following tighter liquidity conditions at home.
An integrated research service from the Financial Times that provides premium, exclusive analysis and predictions on China investment themes.
Using a dedicated FT team of specialists in China and the UK, it taps Chinese sources from the grassroots to the political elite to forecast key trends and issues. It conducts proprietary research to supply its own insights into industry trends and consumer sentiment. By filtering the work of the best Chinese analysts and academics, it keeps you current on key debates as they unfold inside mainland China. Its broad aim is to help the professional investor navigate through the Chinese investment landscape.