New | Property shares hit in panic over developer's sales ban in Shenzhen
China Overseas Land & Investment shares fall after reports a project in Shenzhen had been blocked from sale by city's government
Fear and confusion seized investors in China Overseas Land & Investment shares yesterday after reports a project built by the developer in Shenzhen had been blocked from sale by the city's government.
Shares of the mainland developer, controlled by the Ministry of Construction, dropped as much 6.93 per cent when trading began yesterday, the most since March 2013. But the decline narrowed to 2.77 per cent by the close, with the stock finishing at HK$24.55, after the developer issued an announcement denying the report.
"Investors were shocked by the news in the morning. They panicked because they had believed state-owned or big property companies were safer to invest in," said Alfred Lau, an analyst at Bocom International.
Other mainland developers also saw their stocks fall as investors worried that more property firms, including state-backed companies, were under scrutiny.
State-backed China Resources Land fell 3.94 per cent to HK$20.70, while China Vanke dropped 4.79 per cent to HK$17.5. Private developer Country Garden Holdings declined 2.82 per cent to HK$3.10 and Agile Property Holdings lost 1.69 per cent to HK$4.66.
The website of Shenzhen's Urban Planning, Land and Resources Commission showed that units in blocks one to four at China Overseas Land's Yue Jing Garden had been put under a restricted status.
China Overseas Land said the blocks in question were affordable self-use housing, a kind of government subsidised housing, and all the units had been sold and delivered to buyers. The mainland registration and approval procedures had been completed, it said.
In a statement posted on an official microblog yesterday, the Shenzhen authorities said the lock-up was a normal procedure for government-subsidised housing projects and not an indication that China Overseas Land had broken any rules.
Concerns over the sector began when Kaisa Group Holdings, which this month missed a coupon payment on a US$500 million bond, had units in four of its property projects blocked from sale last month.
On Thursday, the Shenzhen city government blocked project sales by Rongchao Real Estate, and Dong Dao Real Estate.
