China Orders Property Firms to Stop Raising Capital

Wednesday, 28 Apr 2010 08:27 AM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
China will place a moratorium on capital raising by real estate firms as part of a broader campaign to rein in property price rises, state media reported on Wednesday.

The move could stand in the way of about 110 billion yuan ($16.1 billion) in share issues planned by 45 companies, unnamed sources close to the China Securities Regulatory Commission told the China Daily.

The suspension will allow the authorities to examine whether companies have used illegal methods to manipulate market prices, the newspaper said.

Beijing, wary about the risks of an asset bubble, has been trying to cool the real estate market, raising mortgage rates and down payment requirements for second homes and pushing local governments to control speculative buying.

Those steps complement general efforts to prevent the economy from overheating as it fully regained its momentum with the help of booming credit and grew nearly 11.9 percent in the first quarter from a year earlier, the fastest since 2007.

China's banking regulator has also issued new guidelines to make it harder for property developers to obtain funding from trust companies, the 21st Century Business Herald quoted an unnamed executive at a trust company as saying.

Real estate firms seeking loans from trust firms must meet the minimum capital requirement and provide proof of their qualifications for developing a project, the newspaper said.

This would represent a clarification and tightening of rules governing the financing relationship between trust firms and property developers.

Real estate firms have been turning to trust companies because they have looser capital requirements than banks.

Share prices of Chinese property firms have tumbled over the past week, dragging down the main stock index in Shanghai to its lowest level in more than half a year.

But the formation of a property bubble in China has become one of the major risks to sustainable economic growth, the Development Research Centre, a think-tank under the State Council, said on Wednesday.

In its report, published in the China Economic Times, it said that steps taken in recent months by the government had not yet succeeded in tamping down on surging property prices.

"If the controls are not forceful, with our country's growth and development clearly outstripping that of other countries, hot money inflows will quicken and excessive domestic liquidity will increase, progressively inflating asset bubbles," it said.



© 2014 Thomson/Reuters. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Jeff Flake: GOP Needs to Get Immigration Bill on Obama's Desk

Sunday, 23 Nov 2014 09:50 AM

President Barack Obama's executive order granting legal status to 5 million illegal immigrants deals with only part of t . . .

Facebook 'Newspaper' Spells Trouble for Media

Sunday, 23 Nov 2014 07:50 AM

Facebook's move to fulfill its ambition to be the personal newspaper for its billion-plus members is likely to mean mo . . .

Cory Gardner, Colorado May Provide Solution for GOP on Immigration

Sunday, 23 Nov 2014 07:28 AM

Republicans in search of a way to oppose President Barack Obama's moves on immigration without alienating the nation's f . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved