Goldman Sachs: A Likely Return Of PSL-Backed Property Easing, In A Different Way

In light of yesterday’s news re: a PSL injection Goldman Sachs note that they “expect policymakers to scale up urban village renovation and public housing construction in coming years and believe PSL is likely to be one of the major funding sources, although policymakers may not specifically announce a quota beforehand. If this materialises, it should help smooth the decline in property investment and reduce the drag to GDP growth, but the impact on property sales appears uncertain.”

• “On market impact, the likely PSL should help improve liquidity conditions and mitigate the fiscal stress for affected provinces and cities. Besides PSL, we expect the PBoC to leverage RRR cuts and other lending facilities (e.g., MLF, relending) to provide broad-based long-term liquidity to the banking system.”