Brewing new foreign policy to block foreign investment
The analysis said that the introduction of new foreign policy was not ruled out
As early as the end of last year, the Ministry of Commerce and other ministries and commissions introduced a foreign investment catalogue to prevent foreign investment in the Chinese property market. However, due to changes in the international and domestic situation, the entry of foreign capital has become a surging trend.
The reporter learned from the relevant channels that at present, the Ministry of Commerce is working with relevant departments to study new foreign policy to strengthen and further regulate foreign investment in the real estate field. Some analysts indicated that the new policy is likely to delay the settlement of foreign exchange when foreign exchange settlement leaves the market.
For settlement policy
Not long ago, Li Zhiqun, Director of the Department of Foreign Investment Management of the Ministry of Commerce, responded to a question from a Hong Kong reporter and said that in order to coordinate with the country’s macro-control, the Ministry of Commerce has strengthened the management of foreign investment in the real estate sector. The Ministry of Commerce will work together with relevant ministries and commissions of the country to strengthen and further regulate foreign investment in the real estate sector.
At the same time, according to informed sources, the country will introduce a more severe foreign policy, designed to prevent foreign investment in speculation.
An analyst from the China Index Academy believes: "In this case, the introduction of new foreign policy is not ruled out."
Sun Fei, chief economist of Coastal Green Group, in an interview with the China Times, predicted that the focus of the future policy will be on foreign exchange settlement. The main thing is to turn short money into long money, so that the cost of leaving foreign capital after profit is very high.
"And this point, the SAFE is capable of screening." Sun Fei said.
As early as May 2007, the Ministry of Commerce issued the "Circular on Further Strengthening and Regulating the Examination, Approval, and Supervision of Foreign Direct Investment in Real Estate Industry", stipulating that foreign investment in mainland real estate projects must pass examination and approval, and at the same time, all future foreign investment approved by local authorities. Real estate companies must report to the Ministry of Commerce for the record.
On November 7 last year, the National Development and Reform Commission and the Ministry of Commerce jointly promulgated the “Guidance Catalogue for Foreign Investment Industries (Revised in 2007)†and pointed out that China will continue to restrict foreign investors from investing in the construction and operation of high-end hotels, villas, office buildings, and international convention centers. Foreign-invested land development projects must be joint ventures and cooperation with domestic-funded enterprises.
The "Catalogue" also pointed out that the newly added foreign investment in real estate secondary market transactions and real estate agents or brokerage company restrictions, at the same time, the "general residential land development and construction" to encourage the deletion of investment categories.
“Under the current international financial environment, the policy of restricting foreign real estate in the Mainland can be expected to become more stringent.†On March 25th, Qualcom think-tank issued a research report.
Real estate turning point causes foreign investment
One side is to prevent foreign capital from entering, while hot money is rolling into it.
The rapid increase in the entry of foreign hot money in China now is rare in recent years. According to the data of the Ministry of Commerce in February, the actual use of foreign investment has surged by 38%, and a large part of this has flowed into the real estate sector as hot money.
In addition to factors such as the appreciation of the renminbi and the US subprime crisis, the domestic real estate situation is also the key to enabling foreign investors to flock.
Since 2008, housing prices in first-tier cities and some second-tier cities have seen a correction. Some cities such as Guangzhou and Shenzhen have cut their prices by nearly 30%. The situation of foreign capital entering the bottom is obvious.
“Developers who have been extremely aggressive and heavily in debt for some time in 2007 are raising construction funds everywhere.†Someone at Savills (Beijing) stated that “In some cases, developers’ desire for foreign capital has become stronger. And foreign capital is indeed planning to enter the bottom."
At the same time, industry insiders told reporters that some national real estate companies have only one billion yuan of funds on their books.
The above argument has been confirmed by research institutions and a research report published by Qualcom think-tank said: “The key to real estate development in 2008 was the industry capital chain. Due to changes in the industry environment, there are currently a few companies with tight capital in the industry.â€
On March 27th, some media reported that HSBC, Standard Chartered, Citi, East Asia and other major foreign-funded legal person banks have completed the connection test with the central bank's credit information system and formally joined the central bank's credit system, through which the lenders can be queried. Credit record.
Prior to this, people familiar with the operation of foreign banks told reporters that many foreign banks were exceeding the requirements of the central bank's regulations and approved the approval of real estate companies and individual housing loans.
Chen Yu, deputy dean of the China Index Academy, believes that restricting foreign banks is one of the steps to further strengthen supervision of foreign capital.
Hong Kong stocks affected by housing companies in the Mainland
In fact, some analysts said that the Ministry of Commerce has restricted the use of foreign capital to bargain hunters. In addition to the introduction of new foreign policy, the implementation of existing policies has been continuously strengthened, and those listed in Hong Kong have been the most affected.
SOHO China is the latest victim in the tightening of this foreign policy. The company originally planned to raise HK$15 billion from Hong Kong's initial public offering (IPO) to relocate to the Mainland through formal channels in order to support its huge demolition project in Beijing's Qianmen.
However, until now, due to the influence of the state's foreign exchange control, the money has yet to come.
Even stronger companies have to slow down their expansion. Country Garden cancelled the 1.5 billion U.S. dollar debt-issuing plan in November last year. When the plan was resumed in January this year, the scale of issuing bonds was only one-third of the original, and it was changed to convertible bonds that cost more than the normal cost.
Even so, only about 10% of the funds raised by Country Garden in the Singapore market’s issuance of bonds can enter the mainland market. The main reason is the SAFE's policy restrictions.
The funding of the SOHO China and Country Garden Group's listings has reflected the difficulties many developers are facing today. “In the domestic context of tightening monetary policy, indebted developers have no choice but to seek overseas listings to seek funds, but the funds raised by such channels are difficult to remit smoothly to the mainland,†analysts believe.
In this regard, Qualcomm think tanks pointed out: “The potential impact on domestic real estate companies is that the housing companies that have recently been financing such as IPOs in Hong Kong and overseas markets will face more severe market conditions and face greater pressure on pricing. In addition, refinancing is also under pressure in housing companies that have already been listed overseas."
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