Analysts at S&P Global Ratings reported that despite the Chinese government's recent measures to increase liquidity, more and more national developers are at risk of default.
Although the reduction in the reserve requirements rate is a positive change, it will not be enough to save some developers with a "B" rating or lower from default, S&P said, adding that against the background of the difficult situation around China Evergrande Group, investors have become more careful in choosing companies to invest their funds.
Yesterday, the Central Bank of China reported that in order to support the economy, which was under pressure amid a fall in the real estate market, next week the required reserve ratio for most banks will be reduced by 0.5%. This move will free up 1.2 trillion yuan of liquidity.
S&P analysts believe that the real estate sector will continue to show a decline amid tightening credit conditions and restrictive policies in this sector. S&P expects that against this background, residential real estate sales may fall by 10% in 2022 and by another 5-10% in 2023.