Some large hedge funds and investors are accumulating long-shunned China property stocks at low prices, anticipating lucrative returns when the sector recovers from its prolonged crisis.

China Vanke Co. received another round of financial support from authorities, with its largest state shareholder planning to offer up to 4.2 billion yuan ($579 million) to help the distressed developer repay outstanding debt.

“Policymakers don’t want Vanke to fall because that’s going to really damage sentiment,” said Larry Hu, chief China economist at Macquarie, adding that the new phrase in housing policy circles was “stop the decline”. “If Vanke goes bankrupt, the housing market will not ‘stop the decline’.”

If a bail-out for Vanke is forthcoming, China’s leaders will have blinked. Although the rescue would be organised by local authorities, it would have required the approval of Beijing’s top dogs.

SHENZHEN: China Vanke Co has received a lifeline by state authorities, a rare show of support that signals the developer is too big to fail even as dozens of property firms default amid China’s ...