Infrastructure Stocks Soar on Xi Spending Vow: Evergrande Update

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(Bloomberg) – Shares of Chinese infrastructure companies rallied on President Xi Jinping’s pledge to ramp up construction to support an economy hammered by a growing series of Covid-related lockdowns.

The central finance committee decided on Tuesday to improve and advance projects in some areas, state broadcaster CCTV reported. This includes airports and other transportation hubs as well as energy and water conservation projects. The committee also called for an increase in budgetary expenditure and an expansion of long-term financing channels for construction.

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Among the infrastructure stocks that surged were China Communications Construction Co., China State Construction International and construction companies like Sany Heavy Industry Co. The plan, however, failed to support developers. A Bloomberg Intelligence gauge of builder stocks fell 1.7%, while high-yield Chinese dollar bonds fell.

Key developments:

Chinese infrastructure stocks gain on construction spending BoostXi turns to construction spending as lockdowns hit Chinese economy

Ronshine China Unit to Repay 717 Million Yuan of ABS Due Friday (12:25 p.m. HK)

A unit of Chinese developer Ronshine China Holdings Ltd. will repay a 716.8 million yuan ($109 million) tranche of ABS as it matures on Friday, according to a director’s filing with the Shanghai Stock Exchange’s private disclosure system seen by Bloomberg News.

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The funds will be transferred to holders’ accounts on Friday, the document dated April 25 said. Rongxin Fujian Investment is the originator of the ABS, according to the security’s prospectus, which was also seen by Bloomberg.

Ronshine had no immediate comment when contacted by Bloomberg on Wednesday.

Shimao unit expected to get approval for 500 million yuan sales bond extension (12:21 a.m. HK)

The listed onshore unit of Chinese developer Shimao Group Holdings Ltd. won investor approval to extend payment of a 500 million yuan redeemable note over the next year, according to a private company document filed with an interbank market disclosure system.

Shanghai Shimao held a meeting on the proposal at which it was voted on, the document dated Tuesday and seen by Bloomberg News shows.

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The bond’s put option payment was originally due Tuesday, according to data compiled by Bloomberg. The firm offered to pay 10% of the principal due Tuesday and raise the coupon rate to 4.7% from 3.7% currently.

Chinese policymakers disagree on property crackdown: FT (11:30 a.m. HK)

Senior Chinese officials have opposed Vice Premier Liu He’s efforts to ease pressure on the real estate sector, the Financial Times reported, citing six unidentified government officials and political advisers.

Chinese regulators led by Liu fear the government is underestimating the economic impact of the crackdown on its real estate sector and Covid-19 shutdowns. Liu’s Financial Stability and Development Committee wants to give developers more freedom to use income from buyers who prepay homes.

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Liu and Yi Gang, Governor of the People’s Bank of China, fear reinflating bubbles and want to provide liquidity to those in need through targeted lending guidelines and bank reserve requirement cuts, rather than general measures, according to the report.

But according to officials and political advisers, two other vice-premiers – Han Zheng and Hu Chunhua – have sided with the Housing Ministry in wanting to keep pressure on developers by tightly regulating how they can use the revenue. projects.

Junk Chinese Dollar Bonds Fall 0.5-1 Cent as Developers Weaken (10:22 a.m. HK)

Chinese high-yield dollar bonds fell 0.5 cent to 1 cent on the dollar, credit traders said, alongside further declines in many risky assets. A Bloomberg index of Chinese junk notes ended a six-day losing streak on Tuesday but remained near April’s low.

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Greenland Hong Kong Holdings Ltd.’s 5.875% dollar note, due 2024, was listed down 2.1 cents at 56.2 cents at 10:07 a.m. in Hong Kong, according to prices compiled by Bloomberg. Times China Holdings Ltd.’s 6.6% dollar bond, due 2023, fell 1.3 cents to 51.4 cents, and is on course for its lowest close since April 1 .

Redsun Properties 2023 Bond Set for Worst Drop in 3 Months (10:10 a.m. HK)

The dollar bond of Redsun Properties Group Ltd. maturing in April 2023 is on course for its biggest decline since Jan. 12, according to prices compiled by Bloomberg. The 9.7% note fell 3.5 cents on the dollar to 30 cents at 9:54 a.m. in Hong Kong.

Chinese infrastructure stocks gain on higher construction spending (10:03 a.m.)

Shares of Chinese infrastructure companies rallied on the pledge to ramp up construction.

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Stocks that soared in the infrastructure sector include China Communications Construction up 6.9%, Shanghai Construction Group Co. up 4.3%, Power Construction Corp. of China up 7.8%, China Railway Construction Corp. up 5.2% and China State Construction International. Holdings up 7.4%.

Construction Machinery shares that rose were Sany Heavy Industry Co. up 5.8%, Guangxi Liugong Machinery Co. up 1.9%. Cement stocks that rose were Huaxin Cement Co. which rose 9.7%, Anhui Conch Cement Co. up 7.5% and China Resources Cement Holdings up 5.1% in Hong Kong.

China property liquidity malaise lingers on dampened refinancing: BI (8:05 a.m. HK)

The cash crunch for Chinese developers may not ease until access to fundraising is reopened, as paying off debt with cash on hand may only be a transitional solution, wrote Bloomberg Intelligence analysts Kristy Hung and Lisa Zhou.

Low cash coverage of Country Garden Holdings Co. and China Vanke Co. and falling cash of Sino-Ocean Group Holdings Ltd. could stoke investor concerns, implying that the industry’s rebound will be long, they said in a report.

©2022 Bloomberg LP

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