China property shares plunge after removal from Stock Connect

BEIJING – Shares of some Chinese developers dropped in Hong Kong after they were made inaccessible to investors in the mainland, marking another setback for the beleaguered sector.

Shimao Group Holdings’ stock shed as much as 30 per cent on Sept 10, the most in more than a year, after it was scrapped from the Stock Connect programme that links the Shanghai and Shenzhen bourses to the Hong Kong exchange. CIFI Holdings Group and Sino-Ocean Group Holding each sank more than 20 per cent, while a Bloomberg Intelligence gauge of Chinese developers declined as much as 5.3 per cent to the lowest since April.

The removals are the latest blow to China’s real estate stocks amid an ongoing property downturn. The country’s residential housing slump deepened in August despite government efforts to support the market, while shrinking sales from developers such as Country Garden Holdings have also weighed on sentiment.

Real estate firms’ “struggles with debt restructuring and structural challenges for the sector hampering a sales turnaround suggest the risks that the removal from the Stock Connect could be once and for all,” said Bloomberg Intelligence analyst Kristy Hung.

Meanwhile, Alibaba Group Holding shares rose as much as 5.2 per cent in Hong Kong after it was added to the Stock Connect programme. Chinese investors also purchased HK$4.2 billion (S$703 million) worth of Hong Kong stocks less than an hour into trading.