Chinese property developers’ shares and bonds extended gains after Reuters revealed that China is drafting nationwide rules to make it easier for property developers to access pre-sale funds held in escrow accounts in its latest move to ease a severe cash crunch in the embattled sector. Sources told Reuters that the new rules would help developers meet debt obligations and pay suppliers and finance operations by letting them use the funds in escrow that are currently controlled by the municipal governments with no central oversight. Beijing aims to roll out the new rules by as early as the end of January in a push to prevent a wider crisis.
Reuters reveals China drafting rules to ease property developers’ use of escrow funds; markets react
The Hang Seng Mainland Properties index rose 1.6% in afternoon trading after the Reuters report and ended nearly 6% higher. Chinese property developers Shimao Group Holdings, Sunac China Holdings and Country Garden Holdings led the sector’s gains, closing up 11.3%, 7.6% and 8.3%, respectively. U.S. dollar bonds issued by developers, including Sunac and Country Garden, also rose following the report.