CSRC adjusts stance on property firms

The China Securities Regulatory Commission (CSRC) will take action against property developers found to have artificially inflated prices in the housing market, a spokesperson from the commission said Friday.

In compliance with housing control regulations from the State Council, the securities regulator will suspend the listing, refinancing and asset restructuring plans of developers found to have engaged in land speculation or the hording of land plots or housing units with the intention of driving up home prices, Jiang Xiangyang, spokesman for the commission, said at a press conference in Beijing Friday.

Jiang mentioned that the CSRC will determine whether a property developer has violated relevant rules based on opinions from the Ministry of Land and Resources.

These statements follow earlier rumors which hinted at the possible lifting of financing barriers on the real estate industry. The financial news portal 21cbh.com reported Thursday that Xiao Gang, chairman of the CSRC, had already approved the loosening of such restrictions.

As a result of these rumors, China Vanke Co, Poly Real Estate Group Co, China Merchants Property Development Co and Gemdale Corp - the mainland's four largest listed developers by sales - saw their share prices rise 8.36 percent, 6.22 percent, 6.82 percent and 6.69 percent respectively Friday.

Although the CSRC stressed Friday that it would halt refinancing efforts by property developers involved with irregularities, the commission's new line could translate into an easing of earlier financing limitations, according to Fu Shaoqi, chief investment consultant at Shanghai Securities.

"The regulator's statements seem to indicate that developers who comply with relevant rules will be allowed to refinance, even though several types of refinancing options for listed companies engaged in the property industry have been banned for years," Fu said.

After the State Council issued a raft of curbs on the housing market in April 2010, the CSRC announced that it would not approve financing applications from real estate-related companies.

Things changed in the first half of this year when a number of property developers applied to the CSRC for private placements. For instance, Shenzhen-listed Hongrun Construction Group Co, which had canceled its refinancing bid in 2010, announced again in May that it plans to raise no more than 400 million yuan ($65.16 million) from the issuance of 95 million shares, with the money raised to support its projects and replenish liquidity. According to a company insider, Hongrun had been in communication with the CSRC before trying its luck with an official application, the Xinhua News Agency reported.