Realty firms' share issues put on hold

08:11, April 28, 2010      

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Impact on economy yet to be assessed, say analysts

Plans by real estate companies to raise capital through share issues face a moratorium amid the government's efforts to curb run-away housing prices.

Stock issue plans submitted by 45 such companies, amounting to 110 billion yuan ($16 billion), could be affected, sources close to the China Securities Regulatory Commission (CSRC) told China Daily.

The figure would be more than double the amount developers raised from the domestic stock market in 2009, when housing prices rebounded robustly, reaching historic highs in some places.

The suspension will give officials in charge of land price administration at the Ministry of Land and Resources (MLR) an opportunity to investigate if, or how, companies employed illegal or improper methods to manipulate market prices, official sources said.

The government's decision to rein in rocketing housing prices has reportedly triggered the stock market decline for the past week, although economists are divided over its effect on the economy.

Li Daokui, an economics professor at Tsinghua University, told China Daily that he doesn't think the tightening of real estate market regulation will directly dent the overall economy because urbanization will continue to drive growth.

Zhang Xiaojing, an economist at the Chinese Academy of Social Sciences, said it will take two to three months for the government to assess the full impact of the tightening policy.

On April 17, the State Council, or the cabinet, released 10 guidelines that call for all-out efforts to maintain stability in the housing market.


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(Editor:赵晨雁)

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