On May 19th, the real estate sector experienced a significant surge in the A-share market. By the end of trading, 74 out of 79 constituent stocks in the sector had increased. Notably, several stocks, including Shahe Co., Ltd. (000014), Electronic City (600658), and China Fortune Land Development (600340), hit the daily limit up, while Shenzhen Zhenye A (000006) and Rongsheng Development (002146) also saw substantial gains.
Positive Market Indicators
National Economic Update
On May 19th, the Information Office of the State Council held a press conference to discuss the national economic performance in April 2025. Fu Linghui, spokesperson for the National Bureau of Statistics and director of the Department of Comprehensive Statistics of the National Economy, highlighted that the real estate market has shown signs of stabilization after a period of decline. In April, real estate market transactions and prices remained stable, with increased transaction activity in some first- and second-tier cities.
Inventory and Construction Trends
With the recovery of real estate sales, the inventory of commercial housing held by real estate enterprises has decreased. At the end of April, the area of unsold commercial housing continued to decline compared to the end of March, marking a consecutive two-month decrease. From January to April, the year-on-year decline in the area of new housing starts across the country narrowed by 0.6 percentage points compared to the period from January to March.
Urban Renewal and Fiscal Support
Recently, the urban renewal initiative has issued an action “roadmap,” with fiscal funds accelerating the implementation of projects. Guojin Securities noted in its research report that the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council recently issued the “Opinions on Continuously Promoting the Urban Renewal Action.” The document emphasizes increasing support from central budgetary investment and other sources, and providing support to eligible projects through ultra-long-term special Treasury bonds. This fiscal support is expected to further accelerate urban renewal projects and resolve bottlenecks and difficulties in the process.
Improvements in Housing Quality and Market Stabilization
With the implementation of residential project norms and standards, the overall quality of new houses is expected to improve significantly. This improvement is anticipated to stimulate demand for new house transactions and exchanges. Coupled with the current low inventory pressure, there is a foundation for new house prices to stabilize. Li Yujia, chief researcher of the Housing Policy Research Center of the Guangdong Provincial Institute of Urban and Rural Planning, told the Securities Daily that under the backdrop of the new housing market driving and the acceleration of urban renewal, the second-hand housing market is also expected to achieve price stabilization.
Corporate Transformation through Mergers and Acquisitions
During the industry adjustment period, many listed real estate companies have been actively promoting mergers and acquisitions and reorganizations to achieve transformation and development. For instance, Rongsheng Development plans to acquire 68.39% of the shares of Rongsheng Mengguli New Energy Technology Co., Ltd. (the target company) held by Rongsheng Holdings Co., Ltd., and 3.17% of the shares held by Beijing Rongweitong Investment Management Partnership (Limited Partnership) through share issuance, to enter the new energy field.
Yan Yuejin, vice president of the Shanghai-based E-House Real Estate Research Institute, told the Securities Daily that the new reorganization regulations have provided listed companies and counterparties with greater flexibility in terms of payment mechanisms and review efficiency. Some real estate enterprises are expected to open up new development space through asset integration and cross-industry transformation.
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