Hong Kong developers plunged into turmoil amid concerns Beijing targeting property firms, six firms lose US$11 billion in market value
- Reuters report that Chinese officials have told Hong Kong developers they should use their resources and influence to champion state interests prompts sell-off
- Although no policies have been announced, we suggest maintaining a defensive stance on Hong Kong developers: Citi analyst
Hong Kong’s property developers have been left reeling after a sell-off purportedly attributed to the Chinese government’s injunctions for them to serve the national interest drained 6.75 per cent from a gauge that tracks the city’s real estate stocks.
Housing affordability has long been one of the top woes afflicting Hong Kong, and Chinese government officials had long urged the city’s developers and authorities to put their resources together to address the issue, in adherence to Chinese President Xi Jinping’s idea of promoting “common prosperity”. Still, the weekend’s elections that tightened Beijing’s grip on Hong Kong raised concerns that the city’s developers may be subject to the same kind of market-cooling measures that pummelled their mainland Chinese peers.
“Although no policies have been announced, we suggest maintaining a defensive stance on Hong Kong developers,” Ken Yeung, a Hong Kong-based analyst at Citigroup, said in a report on Monday. Home prices nearing all-time highs were driving policy risk concerns amid a potential change in the city’s leadership, he added.
The concerns come after Reuters reported over the weekend that Chinese officials had told major Hong Kong developers they should use their resources and influence to champion state interests. They were also reportedly asked to help solve Hong Kong’s chronic housing shortage, which has previously been blamed on land hoarding by the developers.
Six major Hong Kong developers lost as much as US$11.28 billion in market value on Monday as investors sold their stocks on concerns about increased regulatory scrutiny. The Hang Seng Property Index, a gauge dominated by the city’s biggest developers, plunged 6.75 per cent for its single biggest decline since May 2020. The Hang Seng Index fell 3.3 per cent to end at 24,099 points.
“Sun Hung Kai Properties [SHKP] has recently paid attention to media claims that ‘the central government is putting pressure on Hong Kong real estate developers’. So far, SHKP has never received the above-mentioned news as claimed by the media, and SHKP has never approved of monopolising the market,” the developer, Hong Kong’s largest by sales, said on Monday. It added that it was actively cooperating with the Hong Kong government, taking part in land sharing plans and building large-scale transitional houses.
