(Bloomberg) -- Chinese property stocks and dollar bonds rallied Monday, as a reported move by Beijing to establish a fund to support developers fueled optimism about a turnaround for the struggling sector.  

A Bloomberg Intelligence index of the country’s real estate firms jumped as much as 3.4%, the most in a week. China’s high-yield dollar notes, predominately issued by developers, rose at least 1 cent on the dollar, according to credit traders, with a Bloomberg gauge tracking the sector set to gain for a fourth consecutive session. 

Investors are resuming bets on the battered industry after REDD reported that China’s State Council has approved a plan to set up a fund to support 12 developers and a few new distressed real estate firms nominated by local authorities. If confirmed, the move would mark one of the most direct measures yet taken by Beijing to salvage a sector roiled by massive defaults, slumping sales and a widening boycott on bank loans.

“This is a positive move to support the housing market and lowers the risk of developers suffering from mortgage boycott from homebuyers,” said Patrick Wong, an analyst at Bloomberg Intelligence. 

According to REDD, the fund secured 50 billion yuan ($7.4 billion) from China Construction Bank and a 30 billion yuan relending facility from the People’s Bank of China. It can be upsized to between 200 billion yuan and 300 billion yuan, it added. 

Among the top stock gainers, CIFI Holdings Group Co. surged as much as 20%, with Guangzhou R&F Properties Co. rallying 9.1%. Country Garden Holdings Co. was up more than 8%. 

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