Analysis of Investment Opportunities in Chinese Real Estate Stocks: From the Perspective of Rental Yields and Loan Interest Rates

Based on the latest data analysis,

, and this interest rate spread phenomenon has an important impact on real estate investment [0]. From the simulation data, the current rental yield is about 2.52%, while the mortgage interest rate remains around 4.06%, with a spread of -1.54%.

• Negative Spread Status
  : Current rental yield (2.52%) < mortgage interest rate (4.06%)
• Investment Attractiveness
  : Negative spread reduces the direct investment attractiveness of real estate
• Policy Impact
  : Morgan Stanley expects China may need to invest about 400 billion yuan (5.7 billion US dollars) annually in mortgage subsidies to boost market confidence [1]

• Current stock price: 4.98 yuan, down 82.59% from historical high [0]
• Market capitalization: 59.01 billion yuan
• Profitability: ROE is -31.07%, net profit margin is -20.92% [0]
• Valuation level: P/B ratio is only 0.34x, reflecting market concerns about asset quality [0]

• Bond extension risk: Vanke recently sought extension of domestic bonds, triggering market sell-off [2]
• Lack of market confidence: Even the most stable developers are facing liquidity pressure [2]

• Current stock price: 41.70 yuan, up 8.28% year-to-date [0]
• Market capitalization: 1.05 trillion yuan
• Profitability: ROE is 12.09%, net profit margin reaches 43.51% [0]
• Reasonable valuation: P/E ratio is 7.08x, P/B ratio is 0.82x [0]

1. Asset Quality Improvement
   : Stable housing prices will reduce the non-performing loan ratio of banks related to real estate
2. Recovery of Credit Demand
   : Stabilization of the real estate market will drive new mortgage demand
3. Decline in Risk Premium
   : Valuation of bank stocks is expected to be repaired

1. Cash Flow Improvement
   : Sales recovery will ease capital pressure on developers
2. Reduced Debt Risk
   : Stable housing prices help reduce default risk
3. Market Sentiment Repair
   : Policy support will boost investor confidence

• China Merchants Bank performs relatively stably in the current environment
• Benefits from policy support and improvement in interest rate environment
• Relatively low risk, suitable for conservative investors

• Focus on leading real estate enterprises supported by policies
• Focus on tracking the progress of debt restructuring
• Wait for the signal of narrowing spread between rental yields and loan interest rates

• Chinese government promises to intensify efforts to stabilize the housing market [3]
• New policy tools may be introduced, including national mortgage subsidies for first-time homebuyers [1]
• Urban renewal and affordable housing construction will create new growth points

1. Policy Signals
   : Pay attention to the implementation of specific policies after the Central Economic Work Conference
2. Interest Rate Trend
   : Monitor the impact of mortgage interest rate adjustments on spreads
3. Market Transactions
   : The de-stocking progress of primary residential properties is an important leading indicator
4. Credit Risk
   : Bond maturity and extension situation of key real estate enterprises

1. Overweight Bank Stocks
   : Under the expectation of real estate stabilization, bank stocks have a better risk-return ratio
2. Be Cautious with Real Estate Stocks
   : Wait for clear industry recovery signals before increasing allocation
3. Focus on Policy Dividends
   : Sub-sectors that benefit from real estate stabilization policies

• Real estate recovery may be slower than expected
• Policy effects have a time lag
• Impact of international economic environment on domestic policy space

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[0] Gilin API Data
[1] Bloomberg - “Morgan Stanley Says Mortgage Aid May Halt China’s Housing Slump” (https://www.bloomberg.com/news/articles/2025-12-02/morgan-stanley-says-mortgage-aid-may-halt-china-s-housing-slump)
[2] Wall Street Journal - “Vanke Seeks Extension of Domestic Bond, Triggering Sell-off of Chinese Real Estate Stocks” (https://cn.wsj.com/articles/万科一笔境内债券寻求展期-引发中国地产股抛售潮-847d9f8e)
[3] Bloomberg - “China Vows to Stabilize Property Market as Crisis Deepens” (https://www.bloomberg.com/news/articles/2025-12-11/china-vows-to-stabilize-home-market-as-property-crisis-deepens)