Developers Stalled at Financing Approvals

(Caixin Online) Chinese property developers are waiting for a total of 73 billion yuan worth in fundraising plans to be approved by the government since the country put a halt to the financing activities of developers last October. Analysts say it is time to resume approvals.

According to statistics from Shanghai Securities News, 38 property companies are waiting for approval on proposed fundraising plans in the Shanghai and Shenzhen bourses, worth a total of 73 billion yuan. The financing plans include 60.8 billion yuan worth of proposals for private placements from 36 listed firms and 12.2 billion yuan worth of proposals for additional share issuance from Vanke and Highsun Group.

"It is the right time to resume fundraising for property companies," said Hui Jianqiang, senior researcher from E-House China R&D Institute, due to the stable performance of the capital markets and relatively loose liquidity, as well as the eager financing demands on behalf of developers.

Hui said that there is no reason to exclude the property sector from the capital markets anymore. After a series of measures to crack down on problems such as real estate speculation and property stockpiling, China should reopen financing channels for developers.

Regulators have tightened credit controls on the property sector since the beginning of the year, while strengthening supervision on second home transactions. In February, measures targeted to slow investment in developers' land purchases followed suit.

However, on February 25, a China Securities Journal report said that the securities regulator and land resources regulator had agreed on approval procedures and operations for property company financing plans, raising sentiments that the processing of developer fundraising plans will be resumed soon.

But some are leery that the reopening of property financing reviews necessarily signals an easing of controls directed at the overheated property market. Shen Aiqing, analyst from Guangfa Securities, said that the near-term policy for the property sector will be decided in the upcoming National People's Congress and the Chinese People's Political Consultative Conference which starts this week. He predicts that the current policy environment will remain unchanged.

On September 29 last year, the State Council, China's cabinet, issued a guideline to rein-in industry overcapacity. The China Securities Regulatory Commission then invited the Ministry of Land and Resources to participate in the review process of developer financing plans. Following the introduction of this step, zero companies have had fundraising proposals approved.

(Translated by HW)

Full article in Chinese: http://business.caing.com/2010-02-26/100121136.html