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Shanghai Stock Exchange Expands REITs Trading

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On December 3rd, Huatai Nanjing Jianye REIT successfully made its debut on the stock market, elevating the total number of publicly traded infrastructure REITs on the Shanghai Stock Exchange (SSE) to an impressive 34. This surge in listings is a clear reflection of SSE's robust growth in the REITs sector, which commands nearly 70% of the market share in terms of both the number of products and their fundraising capabilitiesSuch dominance positions the SSE as a pivotal player in the landscape of publicly offered infrastructure REITs

Not only have the REIT products listed on the SSE achieved significant milestones in terms of quantity, but the regular issuance of these instruments is progressing in a highly organized manner

Notably, there has been a marked acceleration in the "new listings" paceAccording to reliable reports from China Securities Journal, this year alone, as many as 14 REIT products have completed their initial public offerings on the SSE within a specific timeframeFurthermore, the pipeline for upcoming listings is equally robust, with several REIT products having received approvals and waiting for the crucial moment to hit the marketGiven the current expansion trajectory and the inventory of products, industry experts generally expect that by the end of this year, the entire REITs market size may surpass current thresholds and ascend to new heights, injecting stronger momentum into financing channels for infrastructure development and diversifying the capital marketThis growth is anticipated to further drive the synergistic progress and prosperity of relevant industries.

Improvement in Market Ecology

The stable performance of listed REIT products has created a commendable demonstration effect, highlighting the positive development prospects of regular issuance

Public data indicate that throughout 2023, the overall operational performance of SSE-listed REITs has met market expectations.

Recently, a mid-term collective performance briefing for rental housing REITs in the Shanghai market was successfully held, where participating companies and managers presented the mid-term performance of their REIT products to investors, gaining widespread recognition"The concept of collective cooperation in building the REITs market is deepening, with performance briefings and issuance roadshows becoming routine activities, establishing a preliminary market ecology of investor relations and mutual trust," said a veteran REITs market researcher in an interview with China Securities Journal.

Additionally, the REITs market has seen numerous announcements of project expansions this yearReports indicate that the SSE is actively promoting the expansion of the Shanghai REITs market, encouraging listed projects to grow and improve through expansions, thereby facilitating the high-quality development of the market.

Regarding the new situations and challenges arising from market development, relevant departments and institutions are continually increasing policy support, establishing a solid foundation for the routine issuance and long-term stable development of the market

Zhu Yuanwei, director of the Real Estate Finance Research Institute, commented on this proactive approach.

Expanding Sources of Incremental Capital

Intrinsic stability is a crucial cornerstone for the routine issuance of REITsThe market performance of the first batch of REITs reflects a gradual improvement in market fundamentals, increasing activity, and a trend toward more rational investor behavior, all of which create a favorable environment for the subsequent routine issuance of new products.

<p"From the investment standpoint, as investors enhance their understanding of the characteristics of REIT products and the underlying assets, their comprehension of product valuation and pricing logic is also deepeningConcurrently, with the acceleration of regular issuance in the REITs market, the depth and breadth of the market are broadening, improving market mechanisms and resilience

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An effective cycle of investment and financing is gradually forming," stated a representative from Taikang Asset Management.

Moreover, the institutional mechanisms of REITs are continuously evolving and improvingFollowing the principle of "mature one type, launch one type," the SSE has optimized the regulatory framework for the review and issuance process, enhancing the multi-layered rule system consisting of "operational guidelines + directives + advice". Meanwhile, supporting measures from relevant ministries and local policies have been rolled out, establishing a cooperative framework for building the REITs market.

"After more than three years of development, the REITs market transitioned from pilot trials and short-term adjustments to a stable upward trajectory todayWith the accelerated construction of the REITs market leading to steady expansion of asset types, the gradual emergence of allocation value, increasingly refined rules and policies, and ongoing enhancement of investor protection, the REITs market is poised for greater opportunities for regular issuance

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