HONG KONG (BLOOMBERG) - Chinese developers may report a 30 per cent year-on-year decline in first-half earnings due this month, which will likely weigh on sentiment, according to JPMorgan Chase analysts.
"No one is immune" amid the industry turmoil and investors' concerns about the liquidity of most private developers are set to linger, the analysts wrote in a note on Sunday (Aug 14) as they downgraded developers including CIFI Holdings Group and KWG Group Holdings.
At least US$90 billion (S$123.6 billion) has been wiped out in China's real estate stocks and dollar bonds this year, with a bursting housing bubble and an intensifying debt crisis threatening to inflict even more pain. Pessimism has deepened after Beijing signalled that home owners, not builders, will be the priority in the authorities' efforts to stabilise China's slumping housing market.
China's banking regulator said on Friday that it will meet developers' "reasonable financing demands effectively" and support their mergers and acquisitions and restructuring of property development projects. Home prices fell 0.1 per cent in July from June.
However, the analysts said until there are stronger policy responses and proof of a recovery in sales, the sector's shares are likely to remain lacklustre. The brokerage does not expect companies that are still suspended from trading - including China Evergrande Group and Shimao Group Holdings - to release first-half results, and there is also a risk of non-publication for others.
To be sure, there might be a potential short-term rebound in September due to an improvement in month-on-month sales during a traditional peak season and speculation about strong policy support from the central government after a key party meeting, the analysts wrote.