Morgan Stanley raised its rating for China's real estate sector to "attractive," seeing potential for a relaxation of current regulations, according to Bloomberg.
"We see a tipping point for the sector in China approaching, and real estate stocks will react to the easing policy that now seems likely," the bank said in a note quoted by Bloomberg.
It is worth noting that China has adopted a strict policy aimed at curbing debt accumulation and speculation in the market, which has led to a sharp decline in home purchases over the past few months, and pressure from debt-laden developers.
However, expectations of policy easing have increased, after the People's Bank of China in September urged banks and financial institutions to help local governments achieve stability.
China’s real estate sector – which accounts for about a quarter of the country’s GDP – has been hurt by the tightening of the borrowing ceiling, which has damaged cash flow as well as developers’ ability to finish construction and raise money for new projects.
