China property stocks fall 20% from May high as concerns linger

CHINA’S property stocks are on track to enter a technical bear market as doubts remain on Beijing’s efforts to bolster the sector.

A Bloomberg Intelligence gauge of Chinese developer shares dropped as much as 3.2 per cent on Thursday (Jun 6), extending losses from a mid-May high to about 20 per cent. Sunac China Holdings fell as much as 11 per cent, while Shimao Group Holdings slumped 8.3 per cent.

Real estate stocks have retreated amid scepticism over a broad support package unveiled by the central government on May 17. While investors initially cheered the policies, which include lower down-payment requirements for homebuyers, they have since questioned how useful the measures will be in reviving demand and addressing a housing inventory glut.

“The latest sales data show there’s not much improvement in property fundamentals,” said Jeff Zhang, a property analyst at Morningstar. “We may need to wait until the end of the year to see a narrowing of declines or a rise in monthly sales as a result of the government’s rescue package.”

Meanwhile, Fitch Ratings lowered its estimates for new home sales value in 2024. It now sees a 15 per cent to 20 per cent decline due to weaker-than-expected sales trends in the first four months of the year and downward pressure in new home prices. BLOOMBERG