China's Developers Swing Wildly After World-Beating Gains in '17Bloomberg News
China’s developers are swinging wildly after world-beating gains this year.
Ten-day volatility for a Bloomberg Intelligence index of 22 property companies surged on Wednesday to the highest since July 2015, as developers rallied after a bloodbath on Monday and additional declines the following day. By Thursday, most were falling again.
“I would advise investors to wait on the sidelines in the short term,” said Toni Ho, an analyst with Rhb Osk Securities Hong Kong Ltd. However, he was optimistic on the six-month to one-year outlook for developers. Moody’s Investors Service said on Thursday that developers’ credit metrics are likely to improve over the next 12 to 18 months.
Trading has turned wilder for Chinese developers after new property curbs clouded the outlook for earnings, which have been soaring for the industry’s biggest players. Investors are also weighing the debt burdens of companies such as Sunac China Holdings Ltd., which splashed out on acquisitions including the purchase of Dalian Wanda Group Co. theme parks.
On Thursday, Sunac led declines among the index members, slipping as much as 4.9 percent in Hong Kong. It’s up 424 percent this year, one of the world’s best performers among big companies.
Kaisa Group Holdings Ltd.’s price swings are among the most extreme for Hong Kong-traded stocks, using a 20-day measure.
— With assistance by Amanda Wang