Beijing (News Today) - China’s banking regulator has confirmed it asked banks to conduct stress tests on property sector loans, but said the move did not signal any policy changes, boosting market confidence on Friday. Earlier media reports suggested that regulators had ordered lenders to test the possible impact of a 60 percent property price plunge, stoking fears of policy tightening and sending Chinese shares down 0.67 percent Thursday.
But in a statement released late Thursday after the market closed, the China Banking Regulatory Commission (CBRC) said the banks had only been asked to assess the impact of price falls of up to 30 percent. It stressed that the tests were just an “often-used” risk management approach by the banking sector and should not be linked to any possible policy change.
“The assumption of various scenarios does not represent the CBRC’s prediction on the trend in the real estate market. Neither does it indicate possible changes in credit policy concerning the real estate sector,” it said.
The key Shanghai Composite Index went up by 0.15 percent in early trade Friday following the release of the statement. Last October, the CBRC ordered lenders to conduct stress tests at least every quarter to strengthen liquidity risk management, previous media reports said, as soaring prices fuelled fears of a bubble in the sector.
The government has also taken a series of measures to curb soaring property prices, including higher down payment requirements and mortgage rates for house purchases. Chinese property prices in June fell 0.1 percent from the previous month, their first monthly fall since the first quarter of 2009, according to official data.
Source : kompas
Thursday, August 12, 2010
Beijing Confirms Banking Test for Property Price Drop
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