Country Garden shares jump after China signals fresh support

SHANGHAI: Shares in heavily indebted Chinese developer Country Garden rose more than 17 percent on Thursday as signs emerged that Chinese officials were planning more concrete support for the struggling sector.

One of the biggest players in China’s property industry, Country Garden has accumulated debts estimated in June at 1.36 trillion yuan ($191 billion). It is just one of several companies, including Evergrande, caught in a sector crisis that has seen a number of debt-laden builders either default or threaten to do so, fueling fears of a spillover into the wider economy.

Bloomberg News reported on Wednesday that Country Garden, which is listed in Hong Kong, was on a list of 50 developer projects that would be eligible for more financial support, citing sources with knowledge of the matter.

The list compiled by regulators includes both private and state-owned developers and is intended as a guide for banks considering supporting companies through a variety of mechanisms, Bloomberg reported.

Sino-Ocean Group, another company that appeared on the list, grew more than 30 percent in Hong Kong. Among other developers, China Evergrande increased almost 6 percent, and the Kaisa Group was more than 7 percent.

Authorities are on edge as the growing debt crisis fuels buyer distrust, sends home prices tumbling and, crucially, threatens to infect other sectors in an already sluggish economy.

Construction and real estate account for about a quarter of China’s gross domestic product.

In another sign that the government is preparing to offer the sector more support, China’s rubber stamp parliament published a report on Wednesday calling on banks to do more for the industry.

The document, from a meeting last month with the head of the People’s Bank of China, said that banks should step up aid for developers to enact the “guaranteed delivery of buildings”.

In recent years, the failure of companies to complete projects has sparked protests and mortgage boycotts across the country.

The document also asked financial institutions to “support the reasonable financing needs of real estate companies, reduce the risk of credit defaults, and alleviate the fears of residents buying long-term housing.”