Photographer: Tomohiro Ohsumi/Bloomberg

Debt-Laden Sunac May Be Due a Stock-Market Reality Check

Investors in Sunac China Holdings Ltd. have had no qualms pushing shares of China’s most indebted property developer up more than 460 percent this year, but have they finally reached their limit?

While the rally in Chinese stocks powered on, Sunac was a notable decliner Wednesday, retreating for the first time in nine sessions after Bloomberg reported a state-owned lender was temporarily suspending new project financing to the real estate firm. Sunac denied the claim, saying its cooperation with the lender continues as normal. The shares pared a slide of as much as 6.4 percent to remain down about 2.8 percent late-afternoon in Hong Kong, the biggest loss on a Bloomberg Intelligence index of Chinese developers.

The second-largest gainer on the MSCI China Index this year (after China Evergrande Group, another real estate company with a track record of high leverage), Sunac is long due a correction -- if you trade on technicals. Its 2017 jump is quadruple that of the BI Chinese real-estate gauge’s, and compares with its modest climb of 7.5 percent for all of last year.

— With assistance by Emma O'Brien

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