SHANGHAI/SINGAPORE : Investors dumped China's banking and real estate stocks on Thursday, fearing deepening trouble in the property sector would begin to hit the financial system as a wave of homebuyers refused to repay mortgage loans for delayed projects.
The movement, which appears to be gaining traction, threatens to kill a nascent recovery in the property sector and could trigger government intervention. The sectors' bearishness weighed on the broader market. China's benchmark index ended flat, while Hong Kong's Hang Seng index closed 0.2 per cent lower, despite strength in tech shares on Thursday.
"China's property downturn may finally adversely affect onshore financial institutions after hitting the offshore high-yield dollar bond market," Nomura chief China economist Ting Lu wrote. "We believe the event might further dampen home buyer sentiment, and hence there is a lower chance of a sales recovery in the near term."