China Property Stocks Fall 20% From May High as Concerns Linger

June 6, 2024

1 minute read

(Bloomberg) — China’s property stocks are on track to enter a technical bear market as doubts remain on Beijing’s efforts to bolster the sector.

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

Real estate stocks have retreated amid skepticism 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 Inc. “We may need to wait until the end of 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 Inc. lowered its estimates for new home sales value in 2024. It now sees a 15% to 20% decline due to weaker-than-expected sales trends in the first four months of the year and downward pressure in new home prices.

(Updates with additional detail throughout.)