Mainland property stocks dropped yesterday amid heavy sell-offs in Hong Kong and global stock markets.
With Hong Kong shares down 12.7 per cent in their biggest single-day drop since 1997, some mainland developers fell at an even sharper pace, led by Guangzhou R&F Properties, China Aoyuan Property Group, Country Garden Holdings and Agile Property Holdings.
R&F Properties fell 51.06 per cent to HK$2.30 in morning trade on rumours the company had failed to repay bank loans. The stock closed at HK$3.65, down 22.34 per cent.
R&F Properties yesterday said operations were normal.
“There has not been any instance where the company failed to repay the principal or interest of its bank loan as and when it is due,” the company said.
The company also said it had not invested in any financial derivative instruments and controlling shareholders had not pledged any shares in the company in relation to any borrowings.
China Aoyuan fell 16.92 per cent to 54 HK cents, Agile Property retreated 15.38 per cent to HK$2.20 while Country Garden fell 15.72 per cent to HK$1.34.
“The panic selling was unexpected,” said JP Morgan analyst Raymond Ngai.
“In terms of fundamentals, the mainland economy is relatively strong compared with the rest of the world, with at least 7 to 8 per cent growth in gross domestic product this year.
“However, those are not the factors stock investors are considering.”
Mr Ngai said investors were still bracing for the bottom as hedge funds continued to dump assets to meet redemptions.
“The stimulus measures announced by the government failed to revive the property market amid such gloomy market sentiment,” he said.
Last week, the central government cut tax, down payments and mortgage rates on home purchases in an effort to bolster the market after prices recorded the smallest gains in three years.
The National Development and Reform Commission said home prices increased 3.5 per cent year on year last month. It was the slowest growth since July 2005, when the number of cities sampled in the survey was doubled to 70.
Patrick Yiu Ho-yin, an associate director at CASH Asset Management, said share prices of mainland property developers gained after the central government announced the measures last week.
“Therefore, they fell faster [yesterday],” Mr Yiu said.
But he said investor confidence in mainland developers would improve if the government continued to announce more measures.
Analysts said Beijing might loosen its policy on second mortgages should the existing stimulus package fail to boost demand.
With endorsement from the central government, local governments had more incentive to launch supporting measures, they said.
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Panic Sell-Off Hits Property Counters
Mainland sector outpaces drop in broader market
Peggy Sito
28 October 2008
Mainland property stocks dropped yesterday amid heavy sell-offs in Hong Kong and global stock markets.
With Hong Kong shares down 12.7 per cent in their biggest single-day drop since 1997, some mainland developers fell at an even sharper pace, led by Guangzhou R&F Properties, China Aoyuan Property Group, Country Garden Holdings and Agile Property Holdings.
R&F Properties fell 51.06 per cent to HK$2.30 in morning trade on rumours the company had failed to repay bank loans. The stock closed at HK$3.65, down 22.34 per cent.
R&F Properties yesterday said operations were normal.
“There has not been any instance where the company failed to repay the principal or interest of its bank loan as and when it is due,” the company said.
The company also said it had not invested in any financial derivative instruments and controlling shareholders had not pledged any shares in the company in relation to any borrowings.
China Aoyuan fell 16.92 per cent to 54 HK cents, Agile Property retreated 15.38 per cent to HK$2.20 while Country Garden fell 15.72 per cent to HK$1.34.
“The panic selling was unexpected,” said JP Morgan analyst Raymond Ngai.
“In terms of fundamentals, the mainland economy is relatively strong compared with the rest of the world, with at least 7 to 8 per cent growth in gross domestic product this year.
“However, those are not the factors stock investors are considering.”
Mr Ngai said investors were still bracing for the bottom as hedge funds continued to dump assets to meet redemptions.
“The stimulus measures announced by the government failed to revive the property market amid such gloomy market sentiment,” he said.
Last week, the central government cut tax, down payments and mortgage rates on home purchases in an effort to bolster the market after prices recorded the smallest gains in three years.
The National Development and Reform Commission said home prices increased 3.5 per cent year on year last month. It was the slowest growth since July 2005, when the number of cities sampled in the survey was doubled to 70.
Patrick Yiu Ho-yin, an associate director at CASH Asset Management, said share prices of mainland property developers gained after the central government announced the measures last week.
“Therefore, they fell faster [yesterday],” Mr Yiu said.
But he said investor confidence in mainland developers would improve if the government continued to announce more measures.
Analysts said Beijing might loosen its policy on second mortgages should the existing stimulus package fail to boost demand.
With endorsement from the central government, local governments had more incentive to launch supporting measures, they said.
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