SouFun Tumbles in New York on Commission ConcernBelinda Cao
SouFun Holdings Ltd. dropped the most in a month, leading a decline among Chinese real-estate listing websites traded in the U.S., on concern developers are delaying sales fees as property prices slump.
SouFun fell 7.2 percent. Shanghai-based E-House China Holdings Ltd. dropped 5.3 percent in New York yesterday, the steepest one-day drop since May 6. Casino operator Melco Crown Entertainment Ltd. sank 4.9 percent, pushing the discount to the Hong Kong-traded shares to the widest since April 28. The Bloomberg China-US Equity Index slid 1.6 percent to 105.41.
Chinese real-estate service providers slumped after Shih Wing Ching, the founder of the company that owns the country’s biggest real estate brokerage, said developers are delaying paying commissions on new home sales. The lag in payments is further crimping revenue that has already been hurt by lower sales and slumping prices as growth in Asia’s biggest economy slows. SouFun last month discounted listing fees to some clients by 40 percent.
“When the property market is in a down cycle, a delay in collecting commissions from developers is generally expected,” Ella Ji, an analyst at Oppenheimer & Co. in New York, said in a telephone interview. “We are still in the middle of that cycle, and there’s room for home prices to drop further. Online property sales agents are still facing pressure to cut fees for their listing clients.”
Daily average new home sales by square meter fell 14 percent in the first week of July versus June in 40 cities monitored by Centaline Group, according to its e-mailed note yesterday. Government data showed home sales from January to May fell 10 percent from a year earlier, compared with the 27 percent surge in 2013, even as developers tried to boost sales by slashing prices and offering incentives.
SouFun, China’s biggest real estate information site, fell to $9.83. E-House sank to $9.13, halting a four-day gain. Its unit Leju Holdings Ltd. dropped 7.2 percent to $11.07.
Hong Kong-based Centaline Group has about 1 billion yuan ($161 million) of uncollected receivables due, Ching said in an interview July 4. He forecast home prices will continue to fall, especially in second- and third-tier cities where even offering discounts won’t be enough to stimulate adequate demand.
Melco Crown’s American depositary receipts dropped to $33.94. The gambling enclave of Macau is facing threats to its growth from China’s slowing economy and greater foreign competition, Pansy Ho, co-chairman of MGM China Holdings Ltd., said in an interview with Betty Liu on Bloomberg Television. The ADRs traded at a 4.9 percent discount to the Hong Kong-traded shares.
The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., fell 0.5 percent to $38.15. The Standard & Poor’s 500 Index dropped 0.7.
Chinese Internet companies followed their U.S. peers lower in New York amid a selloff in U.S. stocks. Online retailer E-Commerce China Dangdang Inc. declined 7.9 percent to $11.62 in the biggest drop since May 15. 58.com Inc., which provides online classified ads, slid 8.8 percent to $48.18.
TAL Education Group, an after-school tutoring service provider, fell 5.3 percent to $27.64. The company is scheduled to report financial results for the three months through May on July 21.
The Hang Seng China Enterprises Index added 0.2 percent to a three-week high of 10,504.98. The Shanghai Composite Index climbed 0.2 percent to 2,064.02, the highest since June 17.