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Four real estate developers in mainland China have recently announced that they have received permission to refinance through share placements, totalling 19.9 billion yuan ($2.8 billion). This development reflects regulatory measures aimed at improving liquidity in the struggling real estate industry. The securities regulatory authority in China has approved five property companies to issue new shares worth 28.4 billion yuan this month. These approvals signal a relaxation of restrictions on equity fundraising in the sector, which were implemented in response to a previous debt crisis.
While actions were taken in November to enhance liquidity and stabilize the sector, there remains a lack of confidence in the market, and defaults have persisted. The recent announcements of fundraising approvals coincide with investor expectations of further stimulus measures from Beijing. These measures are anticipated to revitalize the property market, which has been severely impacted by the crisis, while also strengthening the overall economy.
On June 16, China Merchants Shekou Industrial Zone, a state-owned company, became the first to receive approval for fundraising. The company requested permission to issue 8.5 billion yuan worth of new shares to 35 investors, including its controlling shareholder. The funds raised through this share placement will be utilized for various purposes, such as funding ongoing residential projects and debt repayment.
Last week, four additional companies obtained the green light for fundraising. These companies include Poly Developments and Holdings, Greattown Holdings, Hubei Fuxing Science and Technology Co, and CCCG Real Estate. Yan Yuejin, the research director at E-House China R&D Institute, believes that the successful completion of these share placements will positively impact the companies' cash flow and restore investor confidence in the market. Yan Yuejin also expects that additional stimulus policies will be implemented in the future to further stimulate investments and enhance liquidity.
State media reports indicate that among developers listed on the Shanghai Stock Exchange, 12 companies have already disclosed their intentions to reduce equity refinancing plans in Chinese yuan.
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