Mainland developers fall on tightening concerns
Updated: 2010-10-01 07:50
By Li Tao(HK Edition)
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Mainland developers took a knock in Hong Kong trading Thursday after the Central Government unveiled further measures Wednesday evening aimed at cooling down the country's booming real estate market. Analysts also voiced concern that further tightening measures may be on the way.
China Resources Land Ltd slumped 4.4 percent to close at HK$15.78, Shimao Property Holdings slid 3.0 percent to HK$12.90, and China Overseas Land & Investment fell 2.4 percent to HK$16.42. Meanwhile, Guangzhou R&F Properties Co, the biggest real estate company in southern China, dropped 2.15 percent to HK$10.90.
The Central Government Wednesday ordered banks not to provide loans for third home purchases and subsequent, while down-payments on all home purchases will now have to be at least 30 percent from 20 percent previously.
It also urged banks to strengthen their oversight of consumer loans, banning them for the purpose of buying homes. The measures also limited the number of homes that people can buy in cities where property prices are too high, have risen too quickly or where supply is tight. Furthermore, the government is calling for work on a property tax pilot program to be sped up and gradually expanded across the country.
In a note released Thursday, Credit Suisse advised investors to continue reducing their exposure to mainland property stocks for the near term as it says new measures are yet to be fully reflected in the Hong Kong share prices of these developers.
Analysts also voiced concerns about the possibility of further tightening measures.
"While the latest cooling-off policies are largely in line with market expectations, the mortgage terms are stricter," KGI, a brokerage firm, said in a research report. It added, however, that mainland property plays could rebound in the near term as new measures were widely expected and already factored in.
Investors on the mainland certainly interpreted it that way Thursday as Shanghai-listed property firms closed higher. China Vanke, the country's largest developer, leapt 7.6 percent to 8.40 yuan. Poly Real Estate Group climbed 8.9 percent to 12.36 yuan, while Gemdale gained 5.3 percent at 6.42 yuan.
However, David Ng, head of regional property research at the Royal Bank of Scotland NV (Hong Kong), told China Daily that more austere measures are likely to be announced around the national holiday period. He believes the latest tightening measures are only an extension of the Central Government's April moves, which proved insufficient in cooling off the market effectively.
"If the main round of policies failed to curb prices, we can't place much expectation on its extensions," said Ng.
Since April, the Central Government has introduced a series of tightening measures targeting the property market.
However, just a few months after the measures put a temporary halt on property prices, the market has begun to heat up again. Transaction volume grew rapidly in August compared with July, while property sales rose about 15 percent month-on-month to 353.3 billion yuan.
Ng said that the tightening measures taken in April were considered the "most severe" so far. But he also warned that if they failed to curb the market, doing so in future will become even more difficult. The next round of tightening will have to be "rigorous" or else "it will be hard to produce any results," Ng added.
China Daily
(HK Edition 10/01/2010 page3)