Rescue plan exclusion dents property shares

PUBLISHED : Saturday, 28 February, 2009, 12:00am
UPDATED : Saturday, 28 February, 2009, 12:00am

Mainland property stocks tumbled yesterday after the country's economic planning agency stated that no further stimulus measures were planned for the industry.

The share slide came after National Development and Reform Commission vice-chairman Liu Tienan spoke at a press conference in Beijing.

'The central and regional governments have drawn up lots of property support measures, and they are starting to take effect now,' he said.

Although the 10 sector-specific government stimulus plans had been finalised, Mr Liu said, they would be subject to a continuing examination, depending on market changes. Those sectors excluded from the rescue plans, such as property and energy, would also come under review, he said.

In response to Mr Liu's comments, Hong Kong-listed mainland developer Guangzhou R&F Properties tumbled 9.37 per cent to HK$5.90. China Overseas Land & Investment fell 3.36 per cent to HK$10.34, and Shimao Property Holdings slid 3.12 per cent to HK$4.03.

On the mainland, Poly Real Estate, the second-largest developer by value, fell 5.12 per cent to 17.43 yuan (HK$19.76), its biggest decline since January 13.

Gemdale, a Shenzhen-based developer, dropped to 7.53 yuan, down 3.95 per cent.

'Punters used this excuse to take profit,' said Li Kwok-suen, a fund manager at Phillip Capital Management.

Property stocks rose across the board early this week when the industry was tipped as the next target for special treatment from the government.

'It makes sense for the central government's stimulus plans to exclude property,' said David Ng, a property analyst at Royal Bank of Scotland. 'The decision conveys a signal that the government intended to rescue the economy but not the developers.'

Existing stimulus measures had revived homebuying interest, as property transaction volume had picked up in key mainland cities for the past two months, he said.

Eric Yuen Chi-fung, the head of research at Dao Heng Securities, cast doubt on the industry's prospects, saying oversupply would continue to dent price growth.

'This is a tough year for developers,' he said. 'With weakening housing demand, it will take a year to digest the inventory of unsold flats.'

Investors have become cautious before the property firms' reporting season next month, he said.

Analysts say property firms in Hong Kong are unlikely to report exciting results given the worsening economic outlook.

Provided for
Sector has already had support from central, regional governments
Shares of Poly Real Estate, the mainland's No2 developer, fell: 5.12%