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<Research>Citi Expects Limited Impact on Industry Fundamentals from CN Easing of 'Three Red Lines'; Low Likelihood of Leveraged Investment in Short Term
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Recent reports from Chinese media suggest Chinese property developers are no longer required by regulators to submit the monthly "Three Red Lines" reports, a policy that was intended to limit debt and encourage industry deleveraging, Citi wrote in its research report. As most non-state-owned enterprises have entered stages of debt extension or restructuring, even if investment resumes, it will take more time, Citi stressed. State-owned enterprises still need to comply with the State-owned Assets Supervision and Administration Commission's leverage requirements, making significant leverage increases unlikely. While Citi believes that the removal of the "Three Red Lines" may have a limited impact on the industry's fundamentals, it could signal that the goals of deleveraging and capacity reduction in the real estate sector have been achieved, which may help boost market sentiment. Citi's top picks for Chinese property developers include CHINA JINMAO (00817.HK), GREENTOWN CHINA (03900.HK), CHINA OVERSEAS (00688.HK), and CHINA RES LAND (01109.HK). Their specific ratings and target prices are available in a separate table. AAStocks Financial News |
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