Investors sell Chinese real estate stocks
Investors continued to sell shares of Chinese real estate companies, wary of Beijing’s continued efforts to stabilize the sector.
The Hong Kong Stock Exchange’s real estate index, which tracks 52 real estate companies, fell 4.9% on Thursday to close at its lowest level since 2017, according to the Wall Street Journal.
The Chinese government began to monitor the real estate sector more closely last year as concerns mounted over the heavy indebtedness of some developers.
China Evergrande Group has become the star of the indebted sector, with its stock price falling nearly 80% this year. The real estate wing of the company recorded a loss in the first half of the year for the first time since 2009.
The government has not offered to bail out Evergrande, but would likely get involved to prevent a chaotic collapse of the company. The company has the dubious distinction of being the world’s most indebted developer.
This year, the Chinese government limited developer loans and prohibited private equity firms from investing in residential development.
Recently released economic data showing the weakness of the sector is also prompting investors to sell their shares in developers. The total value of home sales across China fell 19.7% year-on-year in August, the highest since April 2020.
The Hong Kong Stock Exchange’s real estate index, called Lippo Select HK & Mainland Property Index, fell 23% this year on Thursday, pushing down the prices of shares of quality companies like Shimao Group Holdings.
[WSJ] – Denis lynch