Shares of mainland developer Kaisa Group fell the most in three and a half years yesterday after it confirmed the government's ban on selling its three projects in Shenzhen and announced a stake reduction by the founding family. Analysts are trying to ascertain what prompted the government action and what impact it will have on Kaisa's sales this month. There is also no word on the whereabouts of its chairman, Kwok Ying Shing, who is said to have been detained by mainland authorities. Experts said yesterday's stock plunge of 12.5 per cent, to HK$2.30, had largely priced in the risks related to the developer. "In a nutshell, the current depressed pricing reflects some degree of distress and a potential worsening of the situation," said Haitong International credit strategist Alan Kao. The Shenzhen-based developer denied media reports in October that its chairman had been detained, days after another Guangdong developer, Agile Property, confirmed the house arrest of its chairman, Chen Zhuolin. Kaisa said in a filing to the Hong Kong Stock Exchange that the three projects - Shenzhen Dapeng Kaisa Peninsula Resort, Shenzhen Kaisa Yuefeng Garden and Shenzhen Kaisa Central Plaza - had been blocked from sale and the local authorities had stopped processing related transactions. The developer has not received any notification about the action and is talking with relevant authorities to resume sales, it added. "The company now faces a bigger challenge to hitting its annual sales target," said Standard & Poor's property analyst Fu Bei. "We care more about the reasons [behind the sales restriction]. The overall impact will be less severe than that faced by Agile." Agile's shares plunged up to 30.8 per cent on the first day of resumed trading on October 13 after they had been halted on October 3. With investors panicking over the suspension, the developer had to scale down its rights issue and sell assets to repay debts. Kaisa yesterday said the Kwok family trust had reduced its stake to 49 per cent after selling 11.21 per cent of the company's issued share capital for HK$1.7 billion to Shenzhen-based insurer Sino Life, whose stake would increase to 29.96 per cent. Sino Life paid HK$2.898 a share, a 10.19 per cent premium to Tuesday's closing price. Kaisa had set a full-year target of 30 billion yuan (HK$37.8 billion) and had achieved contracted sales of 23.5 billion yuan in the first 10 months. Haitong's Kao said the sales restrictions in Shenzhen projects would affect saleable resources of roughly 6 billion yuan, against the company's total pool of 45 billion yuan.