By Clarence Leong
Chinese property developers were trading lower in Hong Kong, led by Shimao Group Holdings Ltd., as new signs of support for the sector from Beijing failed to lift investor sentiment.
Shimao's shares fell as much as 14% on Monday to HK$6.95, their lowest level in almost a decade. The stock was 11% lower in afternoon trade, with year-to-date losses at 71%. The company's property-management arm, Shimao Services Holdings Ltd., fell 8.8%, taking this year's losses to 40%.
Among other property names Sunac China Holdings Ltd. declined 5.7%, and Logan Group Co. was down 6.4%.
The decline in Shimao companies shares was likely due to investors being spooked by a selloff in the bonds of Shimao Group, Morningstar analyst Cheng Wee Tan said.
A $1 billion Shimao bond due in July 2026 was quoted at about 70.9 cents to a dollar mid-afternoon Hong Kong time Monday, down from 78 cents at the start of the session, according to Tradeweb.
Investors may be concerned about dilution risks if developers seek to raise more capital from equity fundraising, Mr. Tan said.
Shimao last week said it would issue new shares to raise 1.17 billion Hong Kong dollars (US$150.0 million) in net proceeds for debt repayment.
The broader property sector is beginning the week on a weaker footing after Fitch Ratings said last week that China's most indebted developer, China Evergrande Group, and another big developer Kaisa Group Holdings Ltd. had defaulted on debt following missed U.S. dollar bond payments.
The declines come despite more easing signals from Beijing over the weekend. U.S. investment bank Jefferies said in a research note that Beijing's overtures to the sector at an annual work conference last week offered "the most supportive tone since easing in late September."
Jefferies added that it expects officials to start relaxing city-level policy this month or in the first quarter, which could boost home buyers' sentiment and support a gradual recovery in the market.
Write to Clarence Leong at firstname.lastname@example.org
(END) Dow Jones Newswires