Rally in Chinese real estate

The easing of mortgage rules for housing purchases in major cities in China has led to a major rally in Chinese stocks, especially real estate companies. The Hong Kong Hang Seng China Enterprises Index rose by 3.6 percent this morning, with real estate companies such as Longfor and China Resources Land leading the rally. Bloomberg Intelligence’s stock index tracking Chinese real estate developers rose more than 8 percent. The down payment for first-time home buyers in China had been reduced to 20 percent of the home value. According to JPMorgan Chase & Co analysts, including Karl Chan, these regulations will lead to a recovery in housing sales in major Chinese cities in the short term and will bring out previously suppressed demand. In addition, according to sources familiar with the matter, the fact that Country Garden, which is in trouble, announced that it had made the coupon payment on its ringgit-denominated bond also played a role in the rise.