Investors Sell Chinese Real Estate Shares

Hong Kong Stock Exchange (Getty)

Investors continued to sell shares in real estate companies in China, wary of Beijing’s continued efforts to stabilize the sector.

The real estate index of the Hong Kong Stock Exchanges, which tracks 52 real estate companies, fell 4.9 percent on Thursday to its lowest level since 2017, according to the Wall Street Journal.

The Chinese government began to monitor the real estate sector more closely last year as concerns grew about the high debt burden of some developers.

China Evergrande Group has become the banner of the debt sector, with its share price falling nearly 80 percent this year. The company’s real estate wing posted a loss in the first half of the year for the first time since 2009.

The government has not offered to rescue Evergrande, but would likely get involved to avoid a chaotic collapse of the company. The company has the dubious distinction of being the most indebted developer in the world.

This year, the Chinese government has restricted loans to developers and banned private equity firms from investing in housing.

Recently released economic data showing weakness in the sector is also motivating investors to sell their stock in developers. The total value of home sales across China fell 19.7 percent year-on-year in August, the most since April 2020.

The Hong Kong Stock Exchanges’ real estate index, called the Lippo Select HK & Mainland Property Index, has plunged 23 percent this year from Thursday, pushing prices for shares of even investment-grade rated companies like Shimao Group Holdings down. .

[WSJ] Dennis Lynch