Markets
China Property Plunge Worsens as Shimao Deal Raises ‘Red Flag’
- Connected-party deal is concerning, JPMorgan analysts say
- Property stock index drops to lowest since early 2017
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Chinese property stocks sank to a nearly five-year low after a deal between two units of Shimao Group Holdings Ltd. heightened corporate governance concerns in an industry already grappling with a liquidity crisis.
Shares of Shimao Group and its property-services unit both tumbled by the most ever on Tuesday, while a Bloomberg index of property stocks dropped 4.3% to the lowest level since February 2017. A connected-party acquisition announced by the developer late Monday “not only implies tight liquidity conditions for Shimao, but is also a corporate governance red flag,” JPMorgan Chase & Co. analysts wrote as they downgraded shares of both Shimao Group and its services unit.