China’s first Reits make steady start on market debut as investors hunt for stable yield

“The rationale for launching infrastructure Reits is to provide a mechanism for local governments to monetise projects and allow funding for new investment, particularly into business parks,” said Sean Darby, a global strategist at Jefferies. “Nevertheless, this approach to securitisation ought to open the window for further liberalisation of assets that can adopt the Reit structure.”

The launch of the Reits gives a new option to those investing in

First-day rises and declines in China’s Reits are capped at 30 per cent and the band will be limited to 10 per cent thereafter. They can be bought and sold on the exchange like closed-end funds, and at least 90 per cent of their earnings will be distributed as dividend to investors.

The publicly traded Reits play an important role in improving asset allocations on the capital market and supporting the real economy, Chen Fei, head of the treasury department of the China Securities Regulatory Commission, said during the listing ceremony of the asset-backed securities.

The Reits would also diversify the product range, offer financial products with medium returns and boost supply of capital investing in equities, he said.

Hong Kong’s Link Reit has risen 10 per cent this year, more than double the gain on the Hang Seng Index. Its major properties include the Quayside commercial tower, Sau Mau Ping Shopping Centre and TKO Gateway mall in the city.

Additional reporting by Martin Choi