Goldman Sachs recommends investors stay away from Chinese real estate developers

Goldman Sachs recommends that investors stay away from real estate developers in China industry news on Wall Street I want to share 121

[Summary] Goldman Sachs lowered China's real estate industry rating from neutral to negative on factors such as deteriorating leverage and increased inventory. According to data collected by Bloomberg, China's developers' outstanding dollar bond balances are about $50.4 billion, of which 72% were issued in the past two years.

Goldman Sachs believes that although China's real estate developers' bonds rebounded after the worst selling in the past 15 months, they are still the most risky assets in the Asian Bond Market and investors should circumvent them.

"We still have negative opinions on China's real estate developers' bonds, but we are optimistic about good quality companies and short-term bonds, goldman Sachs analysts, headed by Hong Kong's kenth Ho, said in a report in October 27. "One product that meets our standards is the bond that SOHO China will expire in 2017. Soho China has a low leverage ratio and good capital flow ."

Goldman Sachs lowered China's real estate industry rating from neutral to negative in September 4 on factors such as deteriorating leverage and increased inventory. According to data collected by Bloomberg, China's developers' outstanding dollar bond balances are about $50.4 billion, of which 72% were issued in the past two years.

The decline in China's economy has led to the fact that a number of real estate companies are insolvent or are on the verge of defaulting this year. The capital chain of the non-listed company xingrun property broke down in March, and huatong Luqiao and zhongsen tonghao almost defaulted.

The Bank of America Merrill Lynch index shows that problematic bonds in emerging markets may fall for the third consecutive month this month, the longest decline since the global financial crisis.

The National Bureau of Statistics last week released the price index for 70 cities in January. Compared with the previous month, there were 69 cities with lower prices for new houses and 1 city with equal prices. In September, house prices fell by 1.2% year on year, the first time since 2013.

In recent months, the housing purchase restriction policy has been relaxed to stabilize the real estate market: most of the second-tier cities have successively relaxed or abolished the purchase restriction policy. In September 30, the central bank and the China Banking Regulatory Commission issued a Notice to relax the housing mortgage loan policy, first-time buyers can get up to 30% of the mortgage loan interest rate concessions (compared with the benchmark interest rate), by redefining the "first housing loan" for some secondary buyers to provide more preferential loan conditions.

He believes that these measures are unlikely to reverse the adjustment trend of the real estate market. If the stock is too large, the problem cannot be solved at the moment, and the lever of the whole industry will remain high, it is recommended that investors choose real estate companies with better brands.

(Wall Street News)

Goldman Sachs recommends investors stay away from Chinese real estate developers