Asian Shares Gain as China Eases Rates to Aid Property Industry

Asian shares rose on Monday, buoyed by China's decision to ease monetary policy in an effort to support its ailing property sector. The move, aimed at stabilizing the market and boosting investor sentiment, has sparked optimism among investors in the region.

China's central bank announced on Friday that it would set up a 300 billion yuan ($41.49 billion) relending facility for state-owned enterprises (SOEs) to purchase completed and unsold homes at "reasonable prices" for affordable housing. This initiative is part of a broader package of measures designed to clear inventory and stimulate demand in the property market.

While the latest policies have been described as a "historic moment" for the industry, analysts remain circumspect in their assessment. Many note that the size of financing on offer pales in comparison to the estimated trillions of yuan worth of housing inventory across the country. Bank of America head of Greater China property research, Karl Choi, estimates that the 500 billion funding could purchase up to 15% of inventory in tier-2 cities at a deep discount.

Reviving homebuyer confidence is still the key to a property recovery, analysts say. Li Gen, chairman of Beijing G Capital Private Fund Management Center LLP, notes that few entities will be motivated by the latest measures under current market conditions.

Despite these challenges, the latest policy measures have sparked optimism among investors in the Asian region. Asian shares gained on Monday, with the Hang Seng Mainland Properties Index (.HSMPI) easing 0.4% in the afternoon after dropping more than 2% in the morning session. It has gained around 18% so far this month after the Politburo said in an April 30 meeting that it would coordinate to clear housing inventory.

In conclusion, China's decision to ease monetary policy and support the property sector has boosted investor sentiment in the Asian region. While challenges remain, the latest measures have the potential to stabilize the market and stimulate demand, ultimately benefiting both developers and investors.