Property development loans offered to only 16 SOEs

08:29, December 07, 2010      

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The Chineseregulator recently gave a list of 16 state-owned enterprises (SOEs) whose main business is in the field of property development to the country's commercial banks, and asked the banks not to offer new property development loans to other SOEs whose main business is not property development, according to a China Securities Journal report.

The banks have asked their branches to draw back the loans to other central SOEs, except for the 16 on the list as soon as possible, so as to ensure their assets quality, according to the report.

It also said that this move could help to squeeze some SOEs whose major business is not property to quit the sector due to a tightening of the capital.

In March, the Chinese government issued a policy to ask 78 SOEs whose major business is not property development to withdraw from the property sector and, last month, only seven SOEs had announced the sale of the stakes of less than 20 property subsidiaries. The other 71 SOEs have not made any announcement.

According to data from the State-owned Assets Supervision and Administration Commission (SASAC), the previously listed 78 SOEs whose major business was not property development had 227 property subsidiaries in total.

An industry analyst said that since the property market has great potential, if they quit the market hastily, it would be costly if they wish to reenter the market in the future. Under the current macro-policies, the property market is not very optimistic and due to the bright future of the market, most SOEs have adopted a “wait-and-see” attitude and hesitated to carry out the policy and quit the sector.

Some SOEs have announced the sale of their property business, mostly of the not profitable businesses, and the firms are not willing to sell the businesses which earn them money, one industry analyst said.

Industry analysts said that - since the land and money are the core for the growth of the property development business - as the monetary policy becomes tighter and the financing channels narrower, the firms' pressure on cash withdrawn is larger, and a new era for the SOEs to withdraw from the property sector and merger and acquisition will soon arrive.

The 16 central SOEs mentioned in the report are: China State Construction Engineering Corporation, China Poly Group Corporation, China Resources, China National Real Estate Development Group Corporation, Overseas Chinese Town Enterprises Co., China Railway Engineering Corporation, China Railway Construction Corporation, COFCO Limited, China Metallurgical Group Corporation, China Minmetals Corporation, Sinochem Group, China Merchants Group, Nam Kwong Group, China Gezhouba Group Corporation, China Travel Service Holdings Limited and Sinohydro Corporation.

Source: Global Times


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