report body
introduction: since November 2021, the “steady growth” with state-owned enterprise real estate as the core has always been our key recommended direction, and the excess return has been remarkable so far. Recently, as the real estate policy continues to increase, the real estate sector has ushered in a systematic rise. At present, the market pays more attention to the degree of interpretation of this round of real estate market and the sustainability of subsequent rise. Therefore, this report systematically reviews the interpretation of the real estate stock market under the four rounds of real estate relaxation cycle in history for investors’ reference.
a shares have experienced four rounds of real estate easing in 2008, 2012, 2014 and 2018 respectively although the background of these four rounds of market is different, and the deductive rhythm of real estate stocks is slightly different, it contains similar deductive logic. Through the resumption of four rounds of real estate stock market, we aim to answer the following questions:
first, historically, how to relax the real estate regulation policy? What are the performance of real estate stocks at different stages of policy relaxation? Recently, local policies have been relaxed. To what stage has this round of real estate easing policy been interpreted
second, from a historical point of view, how does the real estate stock market deduce? What are the main drivers? What is the signal of the end of the real estate market? Since the end of last year, real estate stocks have achieved significant excess returns, and recently ushered in an accelerated upward trend. In the future, how about the sustainability of this round of real estate market
third, in the calendar round of real estate market, who is the more dominant state-owned enterprise vs private enterprise? Since the end of last year, the real estate leader of central enterprises represented by Poly Developments And Holdings Group Co.Ltd(600048) has outperformed the real estate of private enterprises. How will it be interpreted in the future
1, first round: September 2008 to June 2009
this round of real estate stock market started in September 2008 and ended at the end of June 2009, with an increase of 137.1% and an excess return of 74.0%. The current round of real estate stock market has experienced two stages:
phase I (September 2008 to December 2008): central and local policy relaxation + fundamentals are still deteriorating. Real estate stocks bottomed out before the market, with significant excess returns relative to the market, but the absolute return is not obvious.
phase II (January 2009 to June 2009): policy continued to be loose + Fundamentals improved, and real estate stocks ushered in a double-click market. In July, affected by the tightening of real estate regulation, the current round of rising market of real estate stocks ended.
11, 2008.9-200812: loose policies, real estate bottoming before the market
2008 since the middle of the year, with the spread and deepening of the US subprime mortgage crisis, the central bank’s monetary policy has gradually loosened in accordance with the requirements of “maintaining steady and rapid economic development while controlling price increases”, the central bank has gradually reduced the scale and frequency of issuance of bills by the central bank since July 2008, raised the expected target of new loans for the whole year to more than 4 trillion yuan, and guided financial institutions to expand the total amount of credit. From September 2008 to the end of 2008, the people’s Bank of China lowered the benchmark interest rate of deposits and loans for five consecutive times and the deposit reserve ratio for four times.
the introduction of “four trillion plan” marks the further increase of easing policy 2008 on November 5, the national Standing Committee put forward ten articles and set growth promotion targets. It plans to invest 4 trillion yuan within two years to stimulate economic recovery. Subsequently, the central bank explicitly lifted the hard constraints on the credit planning of financial institutions on November 11, releasing the signal of ensuring economic growth and stabilizing market confidence. On November 28, the Politburo meeting further set “maintaining growth, expanding domestic demand and adjusting structure” as the main task of economic work in the next year, and called for the continued implementation of active fiscal policy and moderately loose monetary policy.
real estate policy: since September 2008, the real estate regulation policy has been relaxed rapidly 2008 July, Changsha lowered the proportion of down payment, in September, Xi’an government increased subsidies for house purchase, local policies have been relaxed. Since the central bank cut the reserve requirement and interest rate in September, the central government has loosened its real estate policy. On October 17, the national Standing Committee proposed “reducing housing transaction taxes and supporting residents to buy houses”; On October 22, the central bank quickly announced the reduction of the down payment ratio, housing loan and provident fund loan interest rate; On October 22, the IRS announced that the deed tax would be reduced to 1% to stimulate housing consumption. On December 21, the general office of the State Council issued several opinions on promoting the healthy development of the real estate market, reducing the exemption standard of business tax.
but the fundamentals of real estate stocks continued to deteriorate at that time at the macro level, although the monetary policy of the central bank began to turn in September, the growth rate of money supply is still slowing down, especially the M1 growth rate has decreased significantly, and many indicators such as GDP growth rate show that the economy is still down. At the industry level, in the context of the last round of emphasis on control, the real estate remained cool from September to December 2008, the real estate sales data also continued to deteriorate, and the price of second-hand houses still increased negatively.
under the combination of loose policy and deteriorating real estate fundamentals, the real estate sector more sensitive to the policy led the market for two months and achieved significant excess return, but the absolute return at this stage is not obvious although wandequan a has only rebounded briefly since the marginal easing of the central bank’s monetary policy in July 2008, the overall market still fell mainly until the introduction of the “four trillion plan”. However, before the introduction of the “four trillion plan”, the central government successively issued relaxation policies for real estate. For example, cities began to relax since July, and the central bank lowered the down payment ratio and housing loan interest rate in October, so that the market gradually restored its pessimistic expectations for real estate. After the central bank announced the interest rate cut and confirmed that the policy officially turned to easing on September 16, the decline of real estate ended and was dominated by bottom grinding shock. By the end of December, the rise and fall range of the real estate sector was 4.65%, outperforming the market by 14.2%. In addition, the building materials, light industry and household appliances sectors of the real estate chain rose by 10.1%, – 13.4% and 2.9% respectively. At the same time, since 2008q2, public funds began to increase their positions in the real estate sector that had been over sold.
from the performance of different real estate enterprises, leading real estate stocks such as “Wanbao Zhaojin” benefited most from the rapid and substantial relaxation of policies, with a range rise of more than 17.4%.
while the real estate of state-owned enterprises rose by 5.7% in the same period, the real estate stocks of non-state-owned nature even fell by 5.7%.
12, 2009.1-2009.7: Fundamentals improved, real estate stocks welcomed
2009 China maintained an extremely loose monetary and credit environment, catalyzing China’s economic recovery 9 in 2009, financial institutions increased RMB loans by nearly 9.6 trillion, an increase of nearly double. Among them, the medium and long-term loans of residents increased by more than 3.8 times in 2009, and M1 and M2 also returned to the upward channel year-on-year. Stimulated by the “four trillion plan”, infrastructure has become an important stabilizer of the economy. The annual growth rate of infrastructure investment was 42.16%, driving the recovery of GDP growth.
at the same time, the real estate regulation policy also maintained a loose pattern 2009 January 3, the four major banks announced that as long as the benchmark interest rate is 0.85 times preferential before October 27, 2008, high-quality customers without bad credit record can apply for a 30% discount interest rate in principle. On February 13, the Ministry of Construction issued the working ideas of the housing security department in 2009, focusing on the development of public rental housing construction. On March 16, the government work report proposed to establish a housing security system. On April 16, the national Standing Committee proposed to stabilize housing and other bulk consumption. On May 25, the State Council issued the notice on adjusting the capital ratio of fixed asset investment projects, reducing the minimum capital ratio of affordable housing and ordinary commodity housing projects to 20% and other real estate development projects to 30%.
since the beginning of 2009, policy stimulus has led to a rapid recovery in all links of real estate and a significant improvement in the profits of real estate enterprises 2009: in January, house prices in 70 cities narrowed to – 0.1% month on month and became positive in March. In February, house sales became positive year-on-year. Since March, real estate development investment has rebounded year-on-year. In April, the area of purchased land hit the bottom year-on-year. At the same time, the profits of real estate enterprises improved, and the year-on-year revenue and profit growth rebounded from the bottom in Q1 2009, providing strong fundamental support for the market of real estate stocks.
loose policies combined with improved fundamentals ushered in a major upsurge in the real estate stock market in 2009, and achieved significant excess returns under the double-click of Davis industry and enterprise fundamentals improved, superimposed on real estate regulation to maintain a loose tone, and the real estate sector ushered in a rise in both valuation and profitability. From the beginning of 2009 to the end of June 2009, the real estate sector rose 124.6%. Compared with the 49.8% excess return obtained by the market, the Pb valuation increased from 2 times to 4 times. The building materials, light industry and household appliances sectors of the real estate chain rose 83.5%, 62.7% and 67.9% respectively.
at the same time, public funds significantly increased their positions in the real estate sector in the first half of 2009, and the allocation proportion reached a high position of 15% in Q2 2009 2008q3-2009q2, active partial equity funds continued to increase their positions in the real estate sector, and the allocation proportion increased from 4.9% to 14.9%.
from the performance of different real estate enterprises, private enterprise real estate stocks performed better at this stage, with an increase of 137.4%, slightly outperforming state-owned enterprise real estate stocks (117.6%) and “Wanbao Zhaojin” (125.8%) in the same period in fact, since December 2008, the real estate ratio of state-owned real estate enterprises / private enterprises has continued to decline.
with the tightening of property market regulation policies, real estate stocks began to fall in July 2009 6 on June 19, the CBRC issued the notice on Further Strengthening the risk management of mortgage loans, aiming to tighten the loan policy for second homes. On August 21, the Ministry of land and resources requested that “local governments should strengthen the post approval supervision of construction land, effectively prevent and prevent the occurrence of phenomena such as use without approval, approval but not expropriation, expropriation but not supply, supply but not use, and severely crack down on land hoarding.” On December 24, the national Standing Committee issued the “national four articles”, which clearly stated that it was necessary to “curb the rapid rise of house prices”. At the same time, the prices of second-hand houses in 70 large and medium-sized cities rose rapidly in the first half of 2009, peaked after rising to 1.1% month on month in June 2009, and began to fall. With the tightening of monetary policy and property market regulation margin, real estate stocks began to fall in July 2009, and the current round of real estate market ended.
2, second round: January 2012 to January 2013
this round of real estate stock market started in January 2012 and ended at the end of January 2013, with an increase of 34.4% and an excess return of 24.4%. The current round of real estate stock market has experienced two stages:
phase I (January 2012 to early July 2012): regulatory policies were loosened, superimposed with marginal improvement in fundamentals, and the absolute and excess returns of the real estate sector were significant.
phase II (from mid and late October 2012 to the end of January 2013): policy margin tightened, but fundamentals improved. Real estate stocks still led the market for 2 months, rebounded to the bottom and achieved excess returns. In February 2013, the “national five articles” were issued, pointing to the significant tightening of real estate regulation, superimposing the marginal decline of fundamentals, and announcing the end of this round of real estate market.
21, 2012.1-2012.7: the policy was relaxed and the real estate stocks came out of the independent market
China’s policy margin has been tightened, the stimulus effect of the “four trillion plan” has weakened, and the impact of the overseas European debt crisis has been superimposed. Since the second half of 2011, there has been great downward pressure on the economy in the third and fourth quarters of 2011, the real GDP growth rate has fallen below 10% and continued to fall.
in order to cope with the economic downturn, the central policy has shifted to easing in an all-round way 201111-30 the central bank announced that it would cut the deposit reserve ratio by 0.5 percentage points, opening a new round of easing cycle. The policy setting of the Politburo meeting in December changed from “managing inflation expectations, adjusting economic structure and maintaining steady and rapid economic development” to “maintaining steady and rapid economic development, adjusting economic structure and managing inflation expectations”, putting economic growth at a more core position. From April to may 2012, the national standing committee continuously put forward statements such as “expanding domestic demand” and “putting stable growth in a more important position”. The reserve requirement was reduced twice in February and may, and the interest rate was reduced twice in June and July, so as to release liquidity and stabilize the economy. The marginal easing of policy led to the stabilization and gradual recovery of social finance, and M1 and M2 also warmed up year-on-year.
in terms of real estate policy, some cities took the lead in relaxing regulation and control, and the central government set the tone to relax regulation and control later In October 11, the personal loan limit of Nanjing housing provident fund was increased from 200000 yuan to 300000 yuan. In February 2012, the central bank proposed to “meet the loan demand of first-time home buyers” at the financial market work symposium. In February, the central bank financial work symposium proposed to “increase support for affordable housing projects and ordinary commercial housing construction to meet the loan demand of first-time home buyers”. The central government relaxed the expression of real estate regulation, and the government work report in March proposed to “promote the increase of commercial housing supply”.
With the central government’s relaxation of real estate control, many cities such as Nanjing, Shanghai, Beijing and Suzhou have relaxed demand side regulation.
policy shift has rapidly warmed up the demand side of the real estate market and improved the fundamentals although China’s economy as a whole was in a downward period during this period, affected by the loosening of policy regulation, the demand side of real estate improved, the sales data rebounded from the bottom since the beginning of 2012, the cumulative growth rate of commercial housing sales area rebounded from – 14% at the beginning of 12 to 49.5% at the beginning of 13, and the month on month housing prices in 70 cities also returned to the upward channel from December 2011 and became positive in June 2012. In addition, the growth rate of accumulated net profit attributable to the parent of real estate enterprises also rebounded from the bottom in 2012q1, rising from – 9% to 4% in 2012q2.
at this stage, the macro and real estate policies are loose, superimposed with the marginal improvement of fundamentals, and the absolute return and excess return of the real estate sector are significant policy marginal easing catalyzed the market to rise in early 2012. However, due to small easing and tight liquidity, the economy continued to fall after a slight rebound at the beginning of the year. The market fell into shock from March to may, and then fell further. For real estate stocks, compared with the “national four articles” in 2010 and the “national eight articles” in early 2011, the loosening of real estate regulation since the end of 2011 can be described as “a long drought meets a sweet rain”, and the extremely pessimistic expectation of the market on the real estate industry has been quickly repaired. Real estate stocks have continued to outperform the market since the beginning of 2012, ushering in the simultaneous rise of profits and valuation. As of July 9, the real estate sector rose 25.2%, ranking the first in the industry, far exceeding the increase of only 1.6% of wandequan a in the same period, and Pb was repaired from 1.7 times to 2.1 times. The rise and fall of building materials, light industry manufacturing and household appliances in the real estate chain were – 6.88%, – 3.7% and 7.22% respectively, less than that of real estate stocks. Institutional funds were also allocated to the real estate sector. In the first two quarters of 2012, the real estate position of public funds quickly rose to a historical high of 12.12%.
from the performance of different real estate enterprises, during this stage, benefiting from loose policies and improved fundamentals, “Wanbao Zhaojin” accelerated its rise, with a rise and fall of 43.4%, surpassing state-owned real estate enterprises (26.7%) and outperforming non-state-owned real estate stocks (18.2%) 2012: from January to March, the real estate stocks of private enterprises performed better. However, as the policy regulation became more and more clear, funds began to flow into leading and state-owned real estate enterprises, and the ratio of real estate state-owned enterprises to private enterprises rose from 0.95 to more than 1.1.
22, 2012102013.1: the policy was tightened, but the fundamentals were strong, and the real estate stocks outperformed
at the end of July 2012, the central government tightened the regulation and control policy on real estate, the market was “alarmed”, and the real estate sector suffered a phased correction 7 on July 24, the State Council issued a document saying that it decided to carry out special supervision on the implementation of the State Council’s real estate market regulation policies and measures in 16 provinces (cities) from late July. The focus of the supervision is to inspect the implementation of housing purchase restriction measures, the implementation of differentiated housing credit policies, the supply and management of housing land, and the implementation and collection of tax policies. On July 27, at the mid year supervision meeting of the CBRC, it said that we should resolutely implement the national real estate regulation policy, continue to strengthen the risk prevention and control of real estate loans and strengthen the risk management of real estate trust. On September 27, the Ministry of land and resources and the Ministry of housing and urban rural development issued the notice on Further Strengthening the regulation of real estate land use and construction management. Affected by this, the real estate industry fell 15.6% from July 9 to October 17.
however, the negative impact of policy tightening on fundamentals is relatively limited. The relaxation in the early stage has stabilized the real estate investment and the price of second-hand houses has returned to positive growth 2012: in June, the prices of second-hand houses in 70 large and medium-sized cities turned positive month on month. In July, real estate investment stabilized and began to rebound in September. The trend of real estate sales remained upward from August to September. At the same time, the growth rate of net profit attributable to the parent of the real estate sector also accelerated from Q3 to Q4 in 2012.
10 since the middle of October, the fundamentals have continued to improve, superimposed emotional repair, real estate stocks led the market for two months and hit the bottom rebound industry fundamentals and improved corporate profits provide molecular support for the real estate market. The real estate development and investment data from July to September disclosed from August to October bottomed out, and rebounded in November, adding that the price of second-hand houses has returned to the upward trend since December. As of the end of January 2013, the real estate sector rose by 24.6% in the range, and the income relative to wandequan a was 12.7%. The building materials, light industry textile and household appliances sectors of the real estate chain rose 17.9%, 10.6% and 19.2% respectively.
at the same time, public funds significantly increased their positions in the real estate sector in the fourth quarter of 2012, and the allocation ratio reached a high position of 12.8% in 2012q4 in the fourth quarter, public funds returned to the real estate sector, with positions rising from 9.2% in 2012q3 to 12.8% in 2012q4.
from the performance of different real estate enterprises, the performance of state-owned real estate enterprises such as “Wanbao Zhaojin” is better than that of private enterprises “Wanbao Zhaojin” and other state-owned real estate enterprises continued to dominate, outperforming non-state-owned real estate stocks.
“national five articles” was issued, which marked the significant tightening of real estate regulation, superimposed the marginal decline of fundamentals, and announced the end of this round of real estate market 2013 February, the national Standing Committee proposed to “resolutely curb speculative investment purchase, strictly implement the purchase of commercial housing restriction measures”. Since then, in March, the State Council required that the purchase restriction areas should cover all administrative areas of the city, and the types of houses subject to purchase restriction should include all new commercial houses and second-hand houses. Under the guidance of the “new five articles”, hot cities quickly issued regulation rules, such as Beijing increasing purchase restrictions, Shanghai, Hangzhou and other cities tightening provident fund loan policies and raising the loan threshold. On May 24, the national development and Reform Commission issued a document to promote the reform of real estate tax, requiring to expand the pilot scope of personal housing real estate tax reform and speed up the legislation of real estate tax. At the same time, the tightening of regulatory policies has been quickly reflected in the fundamentals of the industry. Since February 2013, real estate investment, commercial housing sales and second-hand housing prices have entered the downward channel.
3. The third round: July 2014 to February 2016
this round of real estate stock market started in July 2014 and ended at the end of February 2016, with an increase of 79.3% and an excess return of 31.3%. The current round of real estate stock market has experienced two stages:
phase I (July 2014 to early 2015): monetary and credit easing is gradually implemented, superimposed with the relaxation of policy supervision. Even if the real estate fundamentals are still downward, the financial real estate drives the index to accelerate upward.
phase II (from mid June 2015 to the end of February 2016): policy remained loose, industry fundamentals and corporate profits improved, and the superimposed valuation cost performance was relatively high, resulting in significant excess returns for real estate stocks. Since March 2016, hot cities have tightened regulation and real estate sales have been cold, leading to the end of this round of real estate bull market.
31, 2014.7-2015.1: real estate regulation was fully relaxed, led by real estate
since the beginning of 2014, with the increasing downward pressure on the economy, the policy has gradually shifted e the economy achieved a “soft landing” at the end of 2012. Since then, it has been difficult to see improvement after the “L” shaped bottom. In 2013, the monetary policy maintained strong concentration throughout the year. After the “money shortage” in the middle of the year, the growth rate of social finance began to fall rapidly, and the financing situation of enterprises deteriorated. By the fourth quarter of 2013, the downward pressure on China’s economy had increased again, and corporate profits began to fall. On December 13, 2013, the economic work conference set the tone of “downward pressure on economic operation”, requiring economic work to “pursue progress while maintaining stability and reform and innovation”.
since April of 14, China’s monetary policy has gradually loosened 2014. On April 22, 2014, the central bank announced to cut the RMB deposit reserve ratio of county rural commercial banks by 2 percentage points and the RMB deposit reserve ratio of county rural cooperative banks by 0.5 percentage points; On April 23, the central bank announced the pilot project of pledge of credit assets in its branches. The policy changed to Panasonic, and social finance began to stabilize in April 2014. Since then, as the economic recovery was less than expected, policy easing continued to increase. In September, the central bank created MLF and immediately put 500 billion medium-term base currency into the market, and issued the notice on further improving housing financial services, which clearly required to relax loan restrictions. Since then, the down payment ratio has also been reduced for many times. In the middle of October 2014, PSL was actually launched. At the end of 2014, monetary policy turned to comprehensive easing. On November 21, the central bank announced that it would cut the benchmark deposit and loan interest rates by 0.25 and 0.4 percentage points respectively the next day.
in terms of real estate policy, from the local to the central government, the real estate regulation has gradually changed to a comprehensive relaxation 2014 March, after the two sessions first proposed two-way regulation, all regions gradually relax purchase restrictions. In April, Nanning relaxed the purchase restrictions in some areas; In June, Hohhot issued a document to cancel the purchase restriction; On July 10, Jinan completely cancelled the purchase restriction. Subsequently, by the end of September, more than 30 cities such as Suzhou and Xi’an had liberalized the purchase restriction policy. On September 30, the central bank and the CBRC issued the notice on further improving housing financial services (“930 New Deal”), lowered the lower limit of the loan interest rate of the first house, and re opened the definition standard of “loan or house” for the second house, marking the overall relaxation of real estate at the national level.
however, the rapid loosening of the policy was not immediately reflected in the real estate fundamentals at the sales level, the deregulation of house purchase restrictions did not directly reverse the cold situation of the real estate market. Due to the high inventory of real estate and other problems, the cumulative sales area of commercial housing was still in a negative growth range year-on-year until May 2015. At the price level, real estate prices began to fall from May 2014 and did not return to positive growth until April 2015. At the investment level, the growth rate of real estate development investment and land acquisition area is still in the downward channel, pointing to the weak willingness of real estate enterprises to acquire land.
although the fundamentals have not yet improved, monetary easing has gradually come to the ground, superimposed with the relaxation of policy supervision, and the real estate and finance have accelerated the rise of the index from July to September 2014, many cities successively relaxed the purchase restriction policy, and then to the introduction of the “930 New Deal” at the end of September, the market finally believed in the determination and attitude of the central government to relax real estate. Since mid July 2014, real estate has continued to rise and achieved significant absolute and excess returns. From July 2014 to January 5, 2015, the real estate sector rose 71.6%, outperforming wandequan a by 16.6pct, and the real estate valuation also rose sharply, contributing to most of the rise of real estate stock prices. The building materials, light industry and household appliances sectors of the real estate chain rose 48.4%, 20.7% and 37.1% respectively. In 2014 Q4, the active partial equity fund increased its position in the real estate sector by more than 6.72pct in a single quarter.
from the performance of different real estate enterprises, the market most favored the “ten thousand guarantee fund”, with a range increase of more than 95%, surpassing the real estate of state-owned enterprises (79.7%) and private enterprises (70.1%) in the same period At the beginning of market launch, from July to September, due to the regulation mostly staying at the local level, the market is still “skeptical”, and the speculation is mainly private enterprises with small market value. However, with the promulgation of the “930 New Deal” and the clear relaxation of the policy, the increase of “Wanbao recruitment fund” began to expand.
after that, from the beginning of 2015 to the middle of the year, A-Shares ushered in a round of “leveraged bull”, and the real estate sector had only absolute income, losing 10000 to win all A-Shares 5 in 2015, the central bank cut interest rates and reserve requirements five times in a row (including two targeted cuts). The market liquidity environment was abundant, and the admission of leveraged funds accelerated, accelerating the rise of the A-share market. Although financial real estate rose again after the adjustment was completed in January 2015, even if the central bank lowered the down payment ratio of housing loans in March 2015, the main line of the market has turned to growth sectors such as TMT.
32, 2015.6-2016.2: policies remained loose, superimposed with improved fundamentals, and real estate stocks resisted the decline
b from mid-2015 to early 2016, the monetary policy continued its loose tone 2015: on June 28, 2015, the central bank lowered the reserve requirement and interest rate; The central bank cut interest rates by 25bp on August 26; The central bank lowered the benchmark deposit and loan interest rate again on October 24; On March 1, 2016, the central bank lowered the deposit reserve ratio of financial institutions by 50bp again The continuous increase of easing policy made the growth rate of social finance bottom and pick up in June 2015.
in terms of real estate policy, the government maintains the policy tone of overall relaxation 2015 on August 27, the Ministry of housing and urban rural development, the central bank and the Ministry of Finance proposed to reduce the minimum down payment ratio of provident fund from 30% to 20%. On the same day, the six ministries and commissions issued the notice on adjusting relevant policies on foreign investment access and management in the real estate market to relax foreign investment in China’s real estate. On September 24, the central bank and the CBRC lowered the minimum down payment ratio of the first house to 25%. On November 30, the State Council relaxed the provident fund policy. On February 1, 2016, the central bank further reduced the down payment ratio of the first house to 20%, and comprehensively reduced the down payment ratio of the second house to 30%.
the overall relaxation of the central and local governments and the improvement of the housing demand side have gradually warmed up the real estate market and led to the improvement of enterprise profits since March 2015, house prices have started to rise and sales have begun to pick up. In April, house prices in 70 large and medium-sized cities turned from negative to positive month on month, and the cumulative sales area and sales of commercial houses also turned positive year-on-year in June. At the same time, the growth rate of revenue and net profit attributable to the parent company of the real estate sector also bottomed out in Q1 2015 and rebounded in the following quarters.
from June 2015 to the end of February 2016, the industry fundamentals and corporate profits improved, and the superimposed valuation cost performance was relatively high, resulting in significant excess returns for real estate stocks basically facing the good, the real estate valuation is relatively reasonable. As of June 12, 2015, its PE valuation is at the quantile level of 53.1% since 2000, with a certain margin of safety.
Although the overall market dropped by nearly 50% compared with the high in mid-2015, real estate stocks were relatively resistant to decline, with a decline of 40.9%, ranking the third from the bottom in 31 industries, and achieved an excess return of 10.8% compared with Wande a. The building materials, light industry and household appliances sectors of the real estate chain fell 49.6%, 49.7% and 45.4% respectively.
from the performance of different real estate enterprises, the “Wanbao recruitment fund” rose against the trend, with a range rise of nearly 12% in the environment of A-share decline, Wanbao Zhaojin has become a “safe haven” of the market due to lower market risk appetite and more stable earnings and cash flow. The state-owned enterprises also significantly outperformed the private real estate enterprises with better defense attributes.
since March 2016, hot cities have tightened regulation and real estate sales have been cold, leading to the end of this round of real estate bull market 2016 March, Suzhou upgraded price and loan restrictions, restricting / prohibiting non local residents from purchasing second and third homes; In May, Nanjing began land restriction auction, proposing that “when transferring residential land in hot areas, the municipal government shall set the maximum price of land transfer”; From the end of September to the national day, 16 second tier cities such as Hangzhou, Nanjing, Wuhan and Hefei restarted purchase restrictions. At the same time, 20 cities, including first tier cities, introduced differentiated credit policies, tightened the recognition standards of second homes, and differentially increased the down payment ratio of second homes; In November, Hangzhou strictly limited the land price and raised the down payment ratio of two sets. In addition, the successive tightening of urban regulation and control policies has worsened the real estate fundamentals. From March 2016, the growth rate of commercial housing sales and the second-hand housing prices in 70 large and medium-sized cities began to decline month on month. The tightening of policies suppressed the real estate market, and the current round of real estate market ended.
4. The fourth round: October 2018 to April 2019
this round of real estate stock market started in mid October 2018 and ended in early April 2019, with an increase of 58.9% and an excess return of 45.8%. The current round of real estate stock market has experienced two stages:
phase I (from mid October 2018 to January 2019): local regulatory policies have been loosened and fundamentals have deteriorated. Real estate stocks have bottomed out before the market, with considerable absolute returns and excess returns relative to the market.
phase II (February 2019 to early April 2019): financial and fundamental data support, the superposition policy remains loose, and the real estate sector has a double-click. The absolute return is considerable, but the excess return is not significant. Since May 2019, the central policy regulation has been tightened, superimposing the decline of industry fundamentals, leading to the end of the calf market in real estate stocks.
41, 2018102019.1: independent market of real estate stocks driven by “urban implementation policies”
In 2018, the continuous interest rate hikes of the Federal Reserve triggered global market turmoil. At the same time, the United States launched a trade war with China, superimposed on China’s supply side reform and deleveraging from the fourth quarter of 2017, driving China’s credit contraction. By the second half of 2018, the economy and corporate profits deteriorated rapidly.
2018 July, the policy tone began marginal fine-tuning 2018 July Politburo meeting proposed “changes in stable economic operation” and called for “stabilizing employment, finance, foreign trade, foreign investment, investment and expectations”. The October Politburo meeting further stressed that “the downward pressure on the economy has increased, some enterprises have more operating difficulties, and the long-term accumulated risks and hidden dangers have been exposed”, and called for adhering to the “two unwavering” and promoting the common development of economies of multiple ownership, Study and solve the difficulties encountered in the development of private enterprises and small and medium-sized enterprises. On October 15, the central bank announced a targeted reduction of the reserve requirement by 100bp and introduced a special deduction of individual income tax on October 20. Since then, the State Council and the national development and Reform Commission have issued documents continuously to expand infrastructure and promote consumption.
at the end of 2018, the policy environment began to improve rapidly 12 from 19 to 21, the central economic work conference held and re mentioned “focusing on economic construction”, emphasized “strengthening counter cyclical regulation”, required “implementing more large-scale tax reduction and fee reduction, significantly increasing the scale of local government special bonds”, “solving the problem of difficult and expensive financing of private enterprises and small and micro enterprises”, and set the tone that “finance is the blood of the real economy” “The capital market plays a leading role in financial operation” has raised the status of the capital market to an unprecedented level. The policy was lenient to Panasonic, and then in early 2019, social finance released a huge amount, and M1 and M2 both rebounded.
real estate policy: since the fourth quarter of 2018, real estate regulation has shown signs of loosening slightly, but the central government adheres to the general policy of “no speculation in real estate” october 19, Guangzhou issued the “instructions on further standardizing the management of the real estate market in our city”, which is regarded as a signal that Guangzhou will completely cancel the price limit; On December 19, Heze cancelled the restrictions on the transfer of newly purchased houses; On the 20th, China Construction Bank Corporation(601939) , Industrial And Commercial Bank Of China Limited(601398) , Bank Of China Limited(601988) raised the mortgage interest rate of the first house in Shenzhen from the original benchmark interest rate by 15% to 10%; On the 24th, the Ministry of housing and urban rural development proposed “stabilizing land prices, house prices and expectations”, replacing the “Resolutely Curbing the rise of house prices” proposed in the middle of the year, and superimposing the “city specific policies and classified guidance” proposed by the central economic work conference at the end of the year, so that the market has the expectation of real estate deregulation. But on the whole, at this stage, the general policy of the central real estate financial policy adhered to the positioning of “house is for living, not for speculation”, so the relaxation range is relatively limited.
the relaxation of local regulation has not made the real estate fundamentals improve rapidly due to the strict regulation of the central and local real estate in the first three quarters of 2018, the overall real estate market was cold. From August 2018 to February 2019, the growth rate of commercial housing sales and the price of second-hand housing continued to decline.
local regulatory policies were loosened, making real estate stocks rise in mid October 2018, four months ahead of the market unlike the market, which did not start a round of index market until the beginning of 2019, on October 19, 2018, the “instructions on further standardizing the management of the real estate market in our city” issued by Guangzhou housing and Urban Rural Development Commission was interpreted by the market as a signal to completely cancel the price limit, superimposed with the cancellation of restrictions on the transfer of newly purchased houses by Heze at the end of the year, as well as the setting tone of “policies for different cities and classified guidance” put forward at the central economic work conference, So that real estate stocks began to rise before the market. By the end of January 2019, the real estate sector had risen by 16.2%, significantly outperforming wandequan a in the same period.
from the performance of different real estate enterprises, the market most favored the “ten thousand guarantee fund”, with a range increase of more than 30%, far exceeding the real estate of state-owned enterprises (23.2%) and private enterprises (11.8%) in the same period from August 2018 to the end of January of the following year, the excess return of state-owned enterprise real estate such as “Wanbao Zhaojin” relative to private enterprise real estate stocks continued to expand.
42, 2019.2-2019.4: loose policies, improved fundamentals and slightly outperformed real estate
the policy of Panasonic was lenient, and the monetary and credit environment was looser than expected, catalyzing the recovery of the national economy and corporate profits.
2019 January, social finance released a daily volume, the month added nearly 4.7 trillion, far exceeding the same period in previous years and market expectations, M2 also began to pick up year-on-year. The convenient financing environment improved the economy. In March 2019, PMI returned to the top of the boom and bust line, and industrial enterprises, for example, began to pick up year-on-year.
at the same time, the central government maintained a relatively loose tone in real estate regulation 2019 February 21, 12 banks, the first of the four major banks, relaxed the preferential interest rate for second home loans in Hefei; On March 5, the two sessions proposed “one city, one policy for each city, classified guidance, stabilizing land prices, house prices and expectations; on the same day, the CBRC issued a document saying” to maintain the continuity and stability of real estate financial policies “. Maintain a reasonable and moderate increase in personal housing loans.
under the background of deregulation, the property market bottomed in early 2019, and the profits of real estate enterprises also improved in the fourth quarter of 2018, the deregulation of some cities caused the chain comparison of second-hand housing prices and commercial housing sales in 70 large and medium-sized cities to reach the bottom in January and February 2019, and began to rise one after another. At the same time, the growth rate of revenue and net profit of real estate enterprises also began to rebound in 2019q1.
19 from February 1, 2019 to April 9, 2019, supported by financial and fundamental data, and the superposition policy remained loose, the real estate sector ushered in a double-click, and the range of the real estate sector rose by 36.8%, slightly outperforming Wan Dequan a however, due to the rapid recovery of the current round of economy, all industries ushered in the recovery after the systematic decline of A-Shares in 2018, and the growth industry increased even higher at this stage.
at the same time, the allocation proportion of public funds in the real estate sector once reached nearly 7% in Q4, 2018 2018q3-2019q1, active partial equity funds continued to increase their positions in the real estate sector, and the allocation proportion increased from 4.56% to 6.01%.
from the performance of different real estate enterprises, private real estate enterprises (43.9%) outperformed state-owned real estate enterprises such as “Wanbao Zhaojin” (32.8%) 2019 February onwards, with the improvement of fundamentals, private enterprises accelerated the rise in the second half of the market, “Wanbao Zhaojin” and other state-owned enterprises’ real estate relative to private enterprises’ real estate stocks fell rapidly.
central policy regulation tightened, superimposed with the decline of industry fundamentals, resulting in the end of the calf market in real estate stocks 2019 April Politburo meeting said that “the economic operation in the first quarter was generally stable, better than expected, and had a good start”. The reference to “six stabilities” was deleted, and the “structural deleveraging” and structural problems in economic operation were re mentioned, suggesting that macro policies began to tighten. Since May 2019, the central government has tightened its attitude towards real estate. On May 17, the China Banking and Insurance Regulatory Commission issued the notice on carrying out the work of “consolidating the achievements of combating chaos and promoting compliance construction”, strictly investigating the illegal flow of credit funds to real estate; On June 13, chairman Guo Shuqing said that the real estate industry was over financing; On July 30, the meeting of the Political Bureau of the CPC Central Committee insisted on the positioning that houses are used for living, not for speculation, implemented the long-term management mechanism of real estate, and did not use real estate as a means to stimulate the economy in the short term. On the other hand, under strict policy supervision, the property market is cold. From May 2019 to February the next year, the prices of second-hand houses in 70 large and medium-sized cities continued to fall month on month. Policy regulation tightened, and this round of short-lived real estate market came to an end.
5 , learning from history, enlightenment to the current round of real estate stock market
51. To what stage does the current round of real estate policy deduce
taking history as a mirror, the relaxation of regulatory policies follows the path from central to local to central from the experience of the past four rounds, first of all, the central government will confirm at various meetings that China’s economy is facing certain pressure and needs to introduce corresponding measures to “protect the economy”, marking the loosening of the policy tone; Secondly, the central bank relaxed monetary policy, including RRR reduction, targeted RRR reduction, interest rate reduction and tax reduction; Thirdly, cities across the country took the lead in liberalizing real estate, mostly focusing on relaxing or canceling purchase restrictions and reducing mortgage interest rates; Finally, with the increase in the number of cities that have relaxed regulation and control policies, the central government will probably confirm the general tone of relaxing real estate. In the first and third rounds, the central bank lowered the down payment ratio and housing loan interest rate, in the second round, the Ministry of housing and urban rural development lowered the provident fund loan interest rate, in the fourth round, the Ministry of housing and urban rural development put forward the “stable expectation of stabilizing land price and housing price”, and the central economic work conference put forward the “measures for cities”.
from the start-up time of the real estate market, the real estate stocks do not necessarily respond immediately after the change of the central policy tone and the central bank’s interest rate reduction. Often, the real estate sector enters the trend rising market after the deregulation of cities one after another. Since then, after the central government issued a voice and confirmed the relaxation of real estate regulation at the national level, real estate stocks have a high probability of accelerating their rise within 15-60 days after the central government deregulated the real estate regulation, the odds and winning rate of real estate stocks have increased to varying degrees. The relaxation of regulation at the national level can often strengthen the sustainability of the real estate market.
back to the current round, after the reduction of reserve requirements and interest rates in the early stage, cities have gradually relaxed regulation and control recently, which is at the stage of relaxation from the central government to the local government since the Politburo meeting at the end of July 2021, the policy marginal shift, the reduction of reserve requirements in July and December last year and the interest rate cut in January this year, and the aggregate level has continued to be loose. Recently, various localities have gradually relaxed their “policies based on the city”, including Heze, Tangshan, Shenzhen, accessories, Qingdao and other regions. The recent relaxation methods include reducing the down payment ratio, mortgage interest rate and opening purchase and sales restrictions. They are similar to the initial relaxation methods at the local level in the past few rounds, or point to the current stage from central relaxation to local relaxation.
52 what is the sustainability of this round of real estate market
according to the policy and real estate fundamentals, the real estate stock market under the past four rounds of “steady growth” can be divided into two segments, with significant absolute return and excess return in both rounds
phase I (policy shift to loose + real estate fundamentals downward): at the initial stage of policy relaxation, real estate fundamentals are still deteriorating, and the market is mainly driven by policy relaxation, with obvious absolute return and excess return as the real estate sector is more sensitive to policies, the real estate regulation is in a tight situation before each round of “steady growth” cycle starts. Therefore, although the fundamentals have not been improved at the initial stage of relaxation, the marginal relaxation of real estate policies often leads to the repair of real estate stocks. However, as far as the market is concerned, the index level market often needs stronger policies, clearer credit environment and fundamental signal verification. Therefore, the market of real estate stocks often starts ahead of the market and has a significant excess return relative to the market. Statistics show that under the median caliber, the duration of real estate stocks in the first stage is 97 days, with a rise and fall of 19.0% and a relative return of 15.4%, ranking fourth in all Shenwan industries.
phase II (maintaining loose policies + improving fundamentals): the improvement of fundamentals and still loose policies jointly catalyze the continued rise of real estate stocks, and the absolute and relative returns at this stage even exceed those in phase I.
during this period, the real estate regulation policy still maintained a loose tone. Under the background of continuous overweight of the policy, data such as commercial housing sales and second-hand housing prices often began to pick up during this period. Policy and fundamentals resonate. The performance of the real estate sector is even slightly better than that of the first stage market mainly driven by policy. According to statistics, under the median caliber, the real estate stock market in the second stage lasted 99 days, with a rise and fall of 31.8% and a relative return of 12.1%, ranking third in all Shenwan industries.
real estate market often ends due to policy tightening and marginal deterioration of fundamentals in the past four rounds of real estate market, the central government has significantly tightened the real estate regulation or monetary policy. At the same time, real estate data such as commercial housing sales and second-hand housing prices often enter a downward trend.
taking history as a mirror, the current real estate is in the “loose policy + downward fundamentals”, the deduction probability of the real estate market is still in the first stage, and it is expected to continue to achieve absolute and excess returns at present, the data of real estate sales and house prices are still deteriorating. At the same time, cities have successively lowered the mortgage interest rate and liberalized the purchase and loan restriction policies. Under the downward pressure of the economy, the policies are still increasing, and the real estate market is expected to continue. Moreover, historically, the improvement of fundamental data is not the selling point of real estate stocks. In the period of “maintaining loose policy + improving fundamentals” in the second stage, the performance is not inferior to that in the first stage. The month on month ratio of house prices in 70 large and medium-sized cities is a relatively good observation index. The market of real estate stocks is expected to continue before and at the initial stage of the month on month ratio of house prices.
Who is better than state-owned enterprises
in the first stage (the policy turns to loose + the fundamentals go down), the performance of “Wanbao recruitment fund” is the best, followed by the real estate of state-owned enterprises, and the increase of real estate of private enterprises is relatively small; In the second stage (maintaining loose policies + improving fundamentals), private enterprise real estate is slightly better at the initial stage of policy relaxation, leading state-owned enterprises such as “Wanbao Zhaojin” took the lead in benefiting, but the real estate fundamentals have not improved, and investors may be inclined to buy leading enterprises. Since then, with the improvement of real estate fundamentals, the whole industry has ushered in repair, and the three types of real estate enterprises have performed well. Due to the more serious damage to the real estate fundamentals of private enterprises, their reversal elasticity is greater. In the second stage, the rising space of private enterprise real estate is slightly better than that of state-owned enterprise real estate. Overall, in the four rounds of real estate market, the performance of “Wanbao Zhaojin” is obviously dominant, and the difference between state-owned enterprises and private enterprises is not significant.
this round of real estate market has been interpreted so far, and the increase of “Wanbao recruitment fund” is far higher than that of private enterprise real estate. Whether the follow-up private enterprise real estate can be repaired still depends on the strength of policies and the resolution of industrial risks this round is slightly different from history. Under the background of “three red lines” and “no speculation in housing” in the past two years, the real estate industry has entered a downward cycle, with significant differentiation within the real estate industry, frequent credit risks of private enterprise real estate and a wave of default of private enterprise real estate. Therefore, whether the valuation repair range or the rise and fall range, private enterprises may be far inferior to state-owned enterprises. If the follow-up policies take effect and the risks of the whole real estate industry can be effectively resolved, private enterprises may usher in better repair opportunities.
risk tips
this report is based on historical data analysis and does not constitute investment suggestions for industries or individual stocks
