China Property Stocks Tumble Into Bear Market Despite Government Efforts To Stabilize Sector

Start generating passive income through real estate.

Own a piece of your favorite cities through diversified real estate investments in the country's top markets

*Terms and conditions apply. Visit Nada's website for more details.

Zinger Key Points
  • Sunac China Holding's shares dropped 12% on Thursday
  • Investors question effectiveness in reviving demand and addressing very high housing inventory, reports say

China's property stocks have entered a technical bear market over worries that Beijing's efforts to prop up the sector are falling short of ending the retreat, as the nation’s government promises to buy unsold properties.

A Bloomberg Intelligence index of Chinese developer shares declined 3.3% on Thursday to push losses to nearly 21% from a mid-May high, Bloomberg reported.

Sunac China Holdings shares saw the biggest drop on Thursday, plummeting 12% to 0.146 euros. Real estate shares have declined as skepticism has brewed over a broad support package unveiled by China’s central government on May 17.

Investors initially cheered policies that include lower down-payment requirements for homebuyers, but they have since questioned their effectiveness in reviving demand and addressing a very high housing inventory, Bloomberg reported.

Also read: Chinese Real Estate Developer Resorts To Desperate Shell Game To ‘Sell’ New Homes

They have also raised concerns over their size because a central bank program would spur bank loans worth 500 billion yuan ($69 billion), according to officials, thus covering only a small fraction of the value of China’s empty apartments.

New-home sales at the 100 biggest real estate companies dropped 33.6% from a year earlier in May, easing from a 45% decline in April, China Real Estate Information Corp. data showed, according to Bloomberg.

While the slight month-on-month pickup held up property shares earlier this week, worries over the long-term outlook later pushed investors to take profits.

Some investors wait for a clearer sales-recovery picture, while others seek indicators on major policy shifts that may be unveiled at the Third Plenary Session in July.

Now read: JPMorgan Bullish On China Stocks, Property Sector Despite Recent Struggles

Photo: Shutterstock

Market News and Data brought to you by Benzinga APIs
Posted In: AsiaGlobalReal EstateChinaStories That Matter
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!