Morgan Stanley has lifted its view on China’s real estate industry to “attractive” from “in line,” saying regulators may relax their grip on the sector to help stabilize it and support the economy, reports Reuters. The company’s analysts said that systemic risks have become more manageable as regulators and local governments have the experience and the mechanisms in place to deal with developer defaults.
China’s property sector – which accounts for about a quarter of the country’s gross domestic product – has been hit by tighter borrowing caps that have hurt cashflow as well as developers’ ability to finish construction and raise funds for new projects.
The crisis at struggling developer China Evergrande, which is grappling with some $300 billion in debt and has missed two coupon payments, has only added to those strains as investors fret that other developers are also susceptible to defaults.
