China’s property stocks fell, with the gauge tracking developers on the Shanghai Composite Index declining the most in more than 1 ½ years on renewed concern the government will issue more curbs to cool the real estate market.
The property measure dropped 4.9 percent at the close in Shanghai, the most since January 2011 and the biggest loss among the five industry groups on the benchmark index. China Vanke Co. (000002), the biggest listed developer on mainland exchanges, declined 6.8 percent to 8.7 yuan in Shenzhen, also the biggest retreat in 1 ½ years. Poly Real Estate Group Co. (600048), the second largest, declined by 9.2 percent to 10.30 yuan, the most since April 19, 2010.
“Investors are speculating the government has enough information to release new tightening policies,” said Dai Fang, a Shanghai-based property analyst at Zheshang Securities Co. “It’s hard to tell whether the government eventually will, because they still put economic growth as a priority.”
China’s Premier Wen Jiabao said the country will “unswervingly” implement property controls and prevent home prices from rebounding, the official Xinhua News Agency reported this week, citing a government meeting held on July 26. The country’s home prices posted the biggest gain in more than a year in July, signaling a turning point for the nation’s property market, SouFun Holdings Ltd. (SFUN), the country’s biggest real estate website owner, said yesterday.
In Hong Kong, more than half of the 10 biggest decliners on the MSCI China Index (MXCN) are Chinese developers. State-owned China Resources Land Ltd. (1109) fell the most in two weeks by 4.6 percent to HK$14.82 at the close in Hong Kong. China Overseas Land & Investment Co. (688), the biggest Chinese developer listed in Hong Kong, dropped 3.4 percent to HK$17.70.
China’s eastern export city of Yiwu said it hasn’t canceled the home purchase curbs, the official Xinhua News Agency reported today citing the local housing regulator. That was in response to a news report yesterday that the city had let the restrictions lapse since the beginning of the year.
“Property developers have been selling at a discount and they realize they have enough demand to remove that discount,” said Zhu Jixiang, a Shanghai-based analyst at CSC International Holdings Ltd. “This is increasing concern among investors that this would result in more curbs by the government.”
China sent eight teams to 16 provinces late last month to check on the implementation of its property curbs, according to a statement on the central government website last week. The nationwide check is aimed at “firmly” restraining property speculation and consolidating result of the curbs, it said.
China should expand a property tax trial to additional cities as quickly as possible to curb speculation, according to a commentary on the front-page of the official China Securities Journal on July 30.
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