China property stocks tumble on renewed debt fears

Chinese spot stocks tumbled connected Monday, led by shares of Country Garden which sank to caller eight-month lows connected renewed indebtedness fears for Chinese existent property developers.

Hong Kong-listed shares of Country Garden were down by astir 7%, its lowest level since aboriginal November. Its spot services limb Country Garden Services plunged much than 15%.

JP Morgan downgraded some companies to underweight, and much than halved the people terms of Country Garden and its spot services listing. The bank's analysts pass that unless the Chinese authorities offers much argumentation support, liquidity concerns volition apt remain.

The Hang Seng Mainland Property Index, a gauge of Hong Kong-listed Chinese spot counters, was down much than 5%, underperforming the Hang Seng Index which fell 1.5%.

Shares of Longfor Group were down by 9% connected Monday, portion Sunac fell astir 6%, China Vanke was down 3.4% and China Overseas Land and Investment shed 3.16%.

Country Garden is seen arsenic 1 of the largest spot developers successful the mainland. A determination past week to refinance portion of a 2019 indebtedness installation failed to guarantee investors of its quality to work its debt, Reuters reported.

JP Morgan's analysts slashed people prices for Country Garden by much than 60% to HK$0.90 and Country Garden Services by astir 70% to HK$6.70.

Monday's descent for the Chinese spot assemblage comes aft dense losses past week pursuing anemic property-related information and spot elephantine Evergrande's overdue net study that showed the afloat grade of its default.

The country's spot assemblage is struggling to emerge from a recognition situation aft the authorities cracked down connected its indebtedness levels successful August 2020.

Years of exuberant maturation led to the operation of shade towns wherever proviso outstripped demand, arsenic developers looked to capitalize connected the tendency for location ownership and spot investment.

Weakness successful China's existent property assemblage could beryllium a resistance connected the system for years to travel and could adjacent interaction countries successful the wider region, Wall Street banks have warned.

Goldman Sachs economists said the spot marketplace is expected to spot an "L-shaped recovery" — defined arsenic steep declines followed by a dilatory betterment rate.

Official information past week showed a 7.9% driblet successful spot concern for the January to June period. That's steeper than the 7.2% drop reported for January to May.

Last month, China's second-largest developer China Vanke said the assemblage is "indeed nether pressure successful the abbreviated term" and the concern is "worse than expected," according to a CNBC translation.

Last Monday, spot elephantine Evergrande posted a combined loss of $81 billion successful its agelong overdue net report. The world's astir indebted spot developer fell into default successful 2021 and announced an offshore indebtedness restructuring programme successful March, arsenic the institution struggled to decorativeness projects and repay suppliers and lenders.