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<Research>Nomura: Easing Disclosure of '3 Red Lines' for CN Developers Merely Symbolic w/ Limited Actual Policy Relaxation
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The rise in homebuilders is due to an exclusive report by Shanghai's state-run media, Cailian Press, saying that several developers have been exempted from the disclosure requirements of the 'Three Red Lines', Nomura published a research report saying. The 'Three Red Lines', introduced in August 2020 to significantly reduce developers' leverage, triggered a liquidity crisis in the real estate industry. If this exemption is confirmed, it would imply increased attention from Beijing on the continuously declining real estate sector and reduced concerns about the risk of developers' debt accumulation. However, the broker believed that this exemption is largely symbolic, as the related restrictions have been significantly relaxed since the end of 2022, have not been strictly enforced since mid-2023, and no longer constrain most developers. Therefore, this easing does not represent any substantial policy relaxation. Nomura maintained its original view that Beijing will not allow the real estate sector to decline indefinitely. Recent Qiushi property article and the latest efforts by CHINA VANKE (02202.HK) to avoid imminent default support this view. AASTOCKS Financial News Website: www.aastocks.com |
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