By Justina Lee and Clarence Leong

Shares of Chinese property developers rose sharply for a second day on Friday, helped by news that Beijing will ease companies' access to presales proceeds, potentially helping to address ongoing liquidity constraints in the real-estate sector.

Guangzhou R&F Properties Co., China Aoyuan Group Ltd., Agile Group Holdings Ltd. and Times China Holdings Ltd. were up 7.6%-11% at midday, while China Evergrande Group, Sunac China Holdings Ltd. and Shimao Group Holdings Ltd. gained 4.5%-6.3%.

Chinese developers were among the best performers in Hong Kong, with the Hang Seng Mainland Properties Index outperforming the wider market with a 3.0% advance to 4900.53, the highest level in almost three months. The benchmark Hang Seng Index was 0.1% higher.

The sector's gains come after news that Beijing is moving to regulate developers' access to funds raised by preselling apartments, which are ring-fenced in escrow accounts, according to reports by local media.

The changes will "marginally relax local governments' current strict control over developers' escrow accounts" and should spur a rally in property stocks in the short term, Nomura said in a research note on Thursday. It added that the rally could cool ahead of companies' earnings results in March, given expectations of weak 2021 performance and 2022-2023 guidance.

Brokerage CGS-CIMB said it expects Chinese authorities to introduce further supportive measures for the sector, as developers' weak contracted sales, which worsened further for many companies in January, are likely a cause for worry.

"As [the] property sector is important to China's GDP and job market, we expect regulators to introduce more supportive measures to reverse the trend," CGS-CIMB said.

Another driver might be found in a report by Bloomberg that said authorities have asked state-owned asset management companies to assist in the restructuring of stressed developers, Bocom International said.

"We believe the official participation of experienced bad-debt managers could help developers dispose of assets at more reasonable prices and in a more efficient manner, and ensure proceeds will be prioritized for project delivery," Bocom said in a research note on Friday.

Bocom expects the sector to "continue rebounding to a more reasonable valuation, but high volatility persists due to unsolved debt issues."


Write to Justina Lee at justina.lee@wsj.com and Clarence Leong at clarence.leong@wsj.com


(END) Dow Jones Newswires

02-10-22 2349ET