China banks, property stocks slump as homebuyers stop mortgage payments

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SHANGHAI, July 14 — Investors dumped China’s banking and real estate stocks today, fearing deepening trouble in the property sector would begin to hit the financial system as a...

SHANGHAI, July 14 — Investors dumped China’s banking and real estate stocks today, 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. China-listed developers Gemdale and Greenland Holdings slumped more than 4 per cent, while Hong Kong-listed Longfor Group tumbled 5.4 per cent to a four-month low.The CSI Real Estate Bond Index fell to the lowest level in nearly four years, while an index tracking Chinese high-yield bonds hit record lows.

 

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