Mindful of a need to prevent surging prices, Chinese authorities have banned asset managers from putting money into residential property investment in more than a dozen cities across the country.

Asset managers in China are barred from putting money into residential property investment in 16 mainland cities through private equity programmes, as the Asian giant seeks to curb a hot real estate market, media reports said.

The affected cities include Beijing, Shanghai, Guangzhou, Shenzhen and Xiamen, as mentioned by a notice issued by the Asset Management Association of China, the Business Times reported.

The ban affects entrusted loans, trust schemes and other shadow banking products offered by asset managers affiliated with banks, securities and futures firms, and funds. Stocks and bonds are not affected.

A report by the South China Morning Post said that a survey by AMAC found asset managers under its jurisdiction have been acting as an intermediary to channel bank funding, mainly wealth management products, to residential projects in cities with vibrant housing markets. Some schemes even helped developers to pay land acquisition fees, and unspecified short-term loans.

Chinese policymakers are seeking to rein in high price rises for residential property in the country, eager to prevent excessive leverage and thereby reduce vulnerability to the effects of an economic slowdown. In the year to August 2016 prices rose more than 30 per cent in several cities. Since then, 23 Chinese cities have introduced or strengthened measures to lower demand, including restrictions on who can buy second or third homes and increases in the minimum downpayment required for mortgages (source: Financial Times, 21 October 2016).