(Reuters) -Chinese authorities have asked Ping An Insurance Group to take a controlling stake in embattled Country Garden, the nation's biggest private property developer, four people familiar with the plan told Reuters.
Ping An has said it categorically denies the story.
Following are reactions to the article.
LU WENXI, ANALYST AT PROPERTY AGENCY CENTALINE:
"China’s government departments and state-owned enterprises intervening in large private real estate firms would ensure a good disposal mechanism of bad assets. This is quite important. The key is that this gives positive expectations to the market that debt risks are controllable."
MA HONG, SENIOR ANALYST AT ZHIXIN INVESTMENT RESEARCH:
"Rescuing one developer does not solve risks for the whole real estate industry.
"I hope authorities plan more systematic debt relief for the entire sector, instead of relying on one group or one local government to carry out a bailout.
"These are very large companies. It's not easy for state-owned firms to acquire them, especially now that local governments are also under financial pressure."
EUGENE LAW, DIRECTOR OF CHINA GALAXY INTERNATIONAL:
"If the central government steps in to help Country Garden, it's for easing the debt crisis and preventing a spillover to financial institutions. But it will not help the China property market, which depends on factors, including employment and consumer confidence. Homebuyers would not rush to buy property just because Country Garden gets out of trouble.
MICHAEL WONG, DIRECTOR OF PC SECURITIES:
"The news will give a short-lived boost to Country Garden's stock price and market sentiment, but it ultimately depends on whether Country Garden will be rescued and able to deliver homes at the end of the day. For the broader property market, the key is still home sales."
XU TIANCHEN, SENIOR ECONOMIST, ECONOMIST INTELLIGENCE UNIT:
"If this is true, it will have a very significant positive impact on the property and capital markets. If the crisis is allowed to spread and confidence collapses, the risk is that China enters a negative feedback loop of debt and deflation and succumbs into a lost decade in terms of growth.
"Policies already in place, such as demand-side easing and encouraging banks to increase lending to developers, are not enough to solve the current problem. Only equity injections, such as corporate takeovers or nationalisations, are likely to turn around the confidence of home buyers and investors and materially change the situation."
YAO YU, FOUNDER OF CREDIT ANALYSIS FIRM RATINGDOG:
"Such a move could play a big role in restoring market sentiment. From what we saw being conveyed at the Central Financial Work Conference, finance needs to serve the real economy and letting Ping An take action would reflect the will of regulators.
Country Garden's delivery of homes would be smoother, and homebuyers' worries about unfinished homes could be reduced to a certain extent, which would in turn be conducive to the restoration of home-buying confidence for the entire market.
Restoring home-buying confidence would, in general, benefit other private property developers."
GARY NG, SENIOR ECONOMIST, NATIXIS, HONG KONG
"It is probably not so much about debt repayment but the policy goal to complete existing projects. Country Garden may have reached a tipping point where it will need more liquidity to fulfill such a policy goal. The Chinese government is clearly exploring options, and it is a moment of mobilising state resources to limit contagion risks."