Real‑Estate Surge Sparks a Reckoning for China’s Mid‑Cap Developers
The Shanghai Stock Exchange’s real‑estate corridor exploded on 9 September 2025, as a wave of policy‑driven optimism pushed the sector past the 20‑year low of 2013. Amid a flurry of daily “涨停” (limit‑up) trades, Deluxe Family Co. Ltd (600503) rode the crest of a market that was already showing signs of a bubble‑crash correction. The company, whose shares closed at 3.72 CNH on the day, saw its price climb 9.94 % to 3.76 CNH before hitting the ceiling—an 18‑hour stall that left investors scrambling for an exit.
1. The Policy Catalyst
Shenzhen’s new housing policy, unveiled by the Housing and Construction Bureau and the local branch of the People’s Bank, relaxed purchase restrictions in all but the most coveted districts and flattened mortgage rates for second‑hand buyers. The announcement was the single most potent trigger, providing a clear signal that the government would no longer tolerate a stagnant property market. The policy’s “big‑bang” nature is underscored by the fact that it outstripped the last major reforms in Beijing and Shanghai—both of which were already considered exhausted.
2. Market‑Wide Momentum
The policy shock translated into a market rally that was as broad as it was deep:
| Index | Close | Change |
|---|---|---|
| 上证指数 | 3 815.61 | –0.29 % |
| 深证成指 | 12 553.99 | –0.89 % |
| 创业板指 | 2 867.97 | –1.77 % |
| 科创50指数 | –1.88 % |
Despite the indices’ modest declines, the real‑estate segment bucked the trend. The sector’s “active” status was evidenced by 53 limit‑up stocks in the morning, with the bulk concentrated in property, automotive, and construction‑decoration sectors. In the afternoon, the trend accelerated: Suning Global, Baijiang Group, and Deluxe Family all hit the 10 % daily ceiling, while Shou Kai Shares achieved five consecutive limit‑ups.
The sheer volume of limit‑ups—over 4000 stocks moving against the broader market—demonstrates the depth of institutional conviction. Even though the sector’s 52‑week high is 4.22 CNH, Deluxe Family’s price remains well below this benchmark, indicating that the company is still under significant upside pressure.
3. Deluxe Family’s Positioning
Deluxe Family’s business model—spanning residential development, interior furnishing, leasing, and property management—positions it to benefit from the policy changes. Its focus on “core” urban zones in Shanghai, Suzhou, and Zunyi is a double‑edged sword. On one side, these locations attract affluent buyers and are likely to see accelerated sales; on the other, the company’s negative price‑earnings ratio (-124.372) signals that investors view its current earnings as unsustainable. The low asset‑to‑liability ratio, while advantageous, is insufficient to offset the risk of a potential overvaluation.
The 2025‑08‑11 announcement that Deluxe Family plans to invest up to 3 billion CNH in Shanghai Haihe Pharmaceuticals—seeking at least a 5 % equity stake—adds a layer of diversification. However, the move into the pharmaceutical sector is a distraction from its core competencies and could dilute management focus at a time when the property market is already volatile.
4. Critical Outlook
The rally is undeniably a short‑term phenomenon. The policy’s impact, while immediate, is likely to wane once the market reaches equilibrium. The real‑estate sector’s high leverage, coupled with a negative P/E for Deluxe Family, suggests that the company is riding a speculative wave rather than a sustainable growth trend.
Investors must question whether the 10 % surge is a rational appraisal of Deluxe Family’s fundamentals or simply a reflexive response to policy stimulus. The company’s valuation remains inflated relative to its earnings and cash flow projections. Moreover, the ongoing golden‑sector rally—which has benefited non‑real‑estate stocks like gold miners—indicates that capital is being re‑allocated away from real estate toward more defensible assets.
5. Conclusion
The 9 September 2025 market movements showcase a classic case of policy‑driven exuberance. Deluxe Family’s limit‑up performance is a symptom of a sector still grappling with a fragile valuation environment. While the company’s strategic initiatives in property and diversified investments may offer short‑term upside, the underlying fundamentals—particularly the stark negative P/E and high sensitivity to policy—warn of a potential correction. Stakeholders should remain vigilant, scrutinize earnings releases, and be prepared for a market that may soon return to its rational, earnings‑driven valuation baseline.