Chinese property stocks traded in New York, the best-performing industry group last month, will keep rising on prospects policy makers will take steps to boost growth in the real-estate sector.
“We are seeing a softening of the approach of policy to the developers,” Joel Wells, who helps manage $6 billion at Alpine Woods Capital Investors LLC in Purchase, New York, said by phone on Aug. 30. “We are seeing strong earnings come out of most of the developers and very positive outlook in general for the remainder of the year.”
Real-estate brokerage E-House China Holdings Ltd. (EJ:US) jumped 32 percent in August in New York, the biggest monthly gain since 2011, while SouFun, China’s biggest real estate information website, surged 20 percent following a record 40 percent gain in July. Xinyuan Real Estate Co. climbed 13 percent. The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. rallied 2.6 percent last month.
China will seek “stable and healthy” development of the property market, policy makers said after a meeting on July 30 led by President Xi Jinping. The decision signaled a change in an three-year policy in which the government imposed curbs on the sector. E-House reported last month that second-quarter net income more than doubled, SouFun said profit increased 68 percent, while Xinyuan raised its 2013 sales projection.
China’s July new home prices jumped the most since January 2011 in the nation’s four major cities, with 69 of 70 cities tracked by the government climbing from a year earlier, the National Bureau of Statistics said Aug. 18. Prices in Guangzhou and Shenzhen gained 17 percent while Beijing and Shanghai prices both increased 14 percent.
American depositary receipts of Shanghai-based E-House rallied to $6.06 last month in New York, after reaching a 15-month high of $6.45 on Aug. 14. E-House’s adjusted net income (EJ:US) increased by 127 percent from a year earlier to $15.3 million in the three months to June, compared with analysts’ mean projection of $7.25 million.
Soufun, based in Beijing, jumped to $41.77 in New York last week, the highest level since its U.S. listing in September 2010. The Beijing-based company raised its 2013 revenue forecast to as much as $548 million, from a $538 million guidance on Aug. 8. SouFun’s estimate beat the average forecast of $541 million of four analysts surveyed by Bloomberg.
The Shanghai Stock Exchange Property Index surged 9 percent in August, the biggest monthly rally this year. The government may release a “long-term mechanism” for a stable and healthy property market development in about three months, the official Xinhua News Agency reported Aug. 15, citing Zhu Zhongyi, the deputy head of the China Real Estate Industry Association.
Xinyuan, a developer based in Beijing, rallied to $5.64 on Aug. 30. The company lifted its 2013 sales projection by 6 percent to over $880 million on Aug. 8.
There’s room for real estate shares to extend gains “given that we have great visibility on earnings for the remainder of this year and even into next year,” said Wells at Alpine Woods. “You are going to see continued strength from high-quality developers” in case there are no unexpected policies or global incidents.
Phoenix New Media Ltd. (FENG:US), an Internet and TV media outlet, soared 58 percent in August to $8.82, leading gains on the China-US gauge for the month. Net income at the Beijing-based company jumped 120 percent in the second quarter while sales increased 29 percent, it said in an Aug. 12 statement.
The iShares China Large-Cap ETF (FXI:US), the largest Chinese exchange-traded fund (FXI:US) in the U.S., advanced 2.5 percent last month to $35.13, rising for a second month. The Standard & Poor’s 500 Index slid 3.1 percent in August, the biggest slump since May 2012.
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