I have to ask you your take on these recent
policies that came out last week. How big of
a deal are they? Um I think in the
early days I mentioned piecemeal local policies wouldn't be working
. So this time, I would say the policies
last week, they are top down, they are
central level, they're major, they're very targeted and
also they are very timely because that is just before
the our traditional peak season to it. Golden September
and the Silver October. So I would think the
policy is positive. We already see like say a
search in visitors in the show flat in the tier
one cities and we see some um buying activities.
So the question now is how sustainable the buying interest
will be and how long it will last? Is
it enough to start looking into some of these property
names now, especially in the high yield space?
Uh I think it's like if you look at the
property space, more than 80 90% of them are
either in default or distress. So when you're looking
at it, you need to be sure that the
market is really bottomed out. And now we are
quite sure that the policy cycle probably has bottomed and
we are waiting for the sentiment, the confidence to
bottom out. So that is very, very important
to drive sales. You know, a lot of
the developers, they are doing their self rescue process
and with the current funding circumstance, they, they
can't only depend on a recovery of sales just from
like say last week's policy. So that is is
something we still need to watch out for. I
wouldn't be like say, I would say like we
we do not give up hope, but we also
have to uh do not hope too early, too
much. You seen Country Garden make this this payment
. OK? That perhaps is also them sending a
message that they are OK, I guess, but
you know what's your reaction to them doing this?
And you know, looking at it from a wider
credit analyst perspective, I say it's like as what
we mentioned, policy is positive, right? You
want people to get into the market to buy.
And so that is also we need to watch out
the ending game of those like developers. I would
call them in the IC U, right? So
you do not like say you have the impact from
the policy and the next day you have a major
default, you will have some negative headlines to erode
the the positive feeling. So that is something that's
why I always say execution and the coordination among authorities
and the market players are very important. So this
is not something which is going to be sorted out
in a in a year. It could be much
longer than that, you know, how long do
they unwind all this and perhaps get back on their
feet, probably never get back to the same kind
of growth that they were having in the years before
. Will they I would say a property market like
say very high growth is not a normal thing,
right? China came out from like say the eighties
nineties and developed is private property space that is a
kind of growth is expected together with the country's high
economic growth going forward with China's economic and demographic development
, I would say a slower growth of property market
that is expected and with more deleveraged sector, the
leveraged players, it is in term, it is
indeed good for the long term health of that sector
. So I think slow growth is not a concern
, it's a healthy and high quality growth that is
more important to me as a credit analyst. Then
you know, obviously we got some incremental good news
on Country Garden. I'm just wondering what is your
base case. Now, if you're already looking at
some of the endings of some of the developers and
the IC U is default sort of your base case
. Uh I I hope that they will be coming
out from IC U to the normal world. Not
go to the, that is what I'm hoping for
. And that is my favorite day.