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China's property support measures disappoint

STORY: Shares of Chinese developers wobbled on Monday (May 20).

Investors were worried about China's major steps to stabilize its crisis-hit property sector.

They feared the moves fell short of what was needed to bring a sustainable turnaround in demand and confidence.

Hong Kong's Hang Seng Mainland Properties Index dropped 0.7%.

It had gained around 18% so far this month after the Politburo said in April it would work to clear housing inventory.

A number of top developers saw shares drop Monday - with the likes of Kaisa and Shimao down more than 10% each.

China unveiled measures Friday (May 17) to facilitate up to $138 billion in funding and ease mortgage rules, with local governments set to buy "some" apartments.

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The central bank said it would set up a near $41.5 billion relending facility for state-owned enterprises.

That's to help them buy completed and unsold homes at "reasonable prices" for affordable housing.

The central bank expects the relending program would result in $69.1 billion worth of bank financing.

Friday's announcement came after waves of policy support measures over the past two years failed to revive the sector.

It once made up for a quarter of national GDP and remains a major drag on the economy.

A housing ministry publication described the latest policies as an "historic moment" for the industry.

But many China watchers were more wary in their assessment.

Analysts said the central government's decision to step in as a buyer marked an important step.

But they noted the size of financing on offer pales compared to the estimated trillions of yuan worth of housing inventory across the country.

Analyst say reviving homebuyer confidence is still the key to a property recovery.

However, one market watcher warned few entities will be motivated by Friday's measures under current market conditions.

They argued demand for property is weak with many potential buyers concerned about jobs and incomes in future.