The People’s Bank of China unexpectedly left the five-year loan prime rate intact (Getty Images)
In today’s roundup of regional news headlines, China’s central bank dashes market expectations by leaving a mortgage reference rate on hold, and Singapore’s Housing and Development Board tweaks the policy framework for build-to-order flats. Also on the list are Evergrande’s quibbles with media coverage and Sunac’s indication of a big first-half loss.
China Leaves Mortgage Rate Unchanged, Raising Concerns Over Easing Outlook
China refrained from slashing its widely watched mortgage rate on Monday, in an unexpected move that raised market concerns over how the world’s second-largest economy will tackle the ongoing property crisis while also restoring homebuyer confidence.
The five-year loan prime rate — a reference rate for mortgages — was left unchanged at 4.2 percent at the August fixing, the People’s Bank of China said. Market expectations had been for 15-basis-point cuts of both benchmark loan rates, but the central bank only cut the one-year loan prime rate — the medium-term lending benchmark for corporate loans — from 3.55 percent to 3.45 percent. Read more>>
Singapore’s HDB Changes May Divert Demand to Existing Resale Flats
The Housing and Development Board’s new framework for build-to-order flats has been a long time coming, but it could drive demand to existing flats and eat into the Singapore private housing market’s pool of upgraders, analysts said.
Announced by Prime Minister Lee Hsien Loong during his National Day Rally on Sunday, the framework differentiates BTO projects by locational attributes rather than age of estate. It aims to provide more affordable new flats in attractive locations and reduce the windfall gains that come with the high resale prices of flats in mature estates. Read more>>
Evergrande Says It’s Asking US Court Approval for Debt Plan, Not Filing for Bankruptcy
China Evergrande on Friday said it was asking a US court to approve a restructuring plan for foreign bondholders and rejected what it said were news reports that suggest it filed for bankruptcy.
The request Thursday under Chapter 15 of the U.S. bankruptcy code is “a normal step in the overseas restructuring procedure and doesn’t involve bankruptcy filings”, the world’s most indebted developer said. It cited unspecified “media reports” and said it was clarifying the situation. Read more>>
Sunac Warns of $2B First-Half Loss
Sunac China Holdings has warned of a loss attributable to shareholders in the range of RMB 15 billion to RMB 16 billion ($2 billion to $2.2 billion) for the first six months of 2023.
The losses recorded in the period were mainly due to the impact of the downturn in the real estate market, with lower income and lower gross profit margin of property projects carried forward from the period, and expected net foreign exchange losses due to fluctuations of foreign exchange rates, the developer said. Read more>>
Goldman Cuts China Stock Targets on Renewed Property Concerns
Chinese stocks will settle in a lower trading range than previously expected until Beijing introduces more forceful policy responses to address the contagion risk from a property slump, according to Goldman Sachs.
The Wall Street bank has cut its full-year earnings-per-share growth estimate for the MSCI China Index to 11 percent from 14 percent and reduced the 12-month index target to 67 from 70, according to a Monday note by strategists including Kinger Lau. The new target implies a 13 percent gain from the gauge’s Friday close. Read more>>
Hilton Bets on China’s Middle Class as It Eyes 730 Hotels in Next 10 Years
International hotel operator Hilton plans to continue expanding its footprint in China, betting on surging demand from the nation’s middle class amid an upswing in tourism.
The operator of Waldorf Astoria and Conrad hotels and resorts plans to open more than 730 hotels in mainland China in the next 10 years after opening 100 properties last year, according to Clarence Tan, a senior vice president of development for Asia Pacific. Read more>>
Hong Kong Builders Whipsawed by High Inventories, Rising Rates, China Slowdown
Dark clouds have gathered for Hong Kong developers as mainland China’s property crisis intensifies at a time when the city’s builders are already grappling with the deadly combination of rising interest rates, an economic slowdown and a robust pipeline of new office space.
Weakening residential transaction volumes in recent months have doused hopes of a sustained recovery from the pandemic lows as China’s reopening failed to generate the expected inflows. Adding to the sector’s misery were higher mortgage rates, at least a third more expensive compared with a year ago. Read more>>
More Singapore State Properties to Be Used as Co-Living Spaces
More state properties are expected to be put aside for co-living use in the next few months, as the Singapore Land Authority last Wednesday awarded a tender for this purpose in Hindoo Road.
The two-storey building at 79 to 95 Hindoo Road in Little India has been awarded to construction and development company Eco Energy, which is collaborating with Cove Living, a co-living operator. Read more>>
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