Chinese property stocks hit as housing ministry instructs six provinces to conduct in-depth study of pre-sales

Chinese property stocks fell on Tuesday after a long weekend break amid reports of possible property pre-sale restrictions in Guangdong and five other provinces, while the ongoing US-China trade war continued to hurt the overall market sentiment.

The Shanghai Composite Index fell 0.6 per cent, or 16.35 points, to 2,781.14 after the market reopened following the Mid-Autumn Festival public holiday. The index closed trading on Friday with a 2.5 per cent gain to reach a six-week high of 2,797.48.

The Shenzhen Composite Index declined 0.5 per cent, or 7.80 points, to 1,437.31, while the CSI 300 Index, which tracks the Chinese big-caps, dropped 0.90 per cent, or 30.69 points, to 3,379.80.

Markets in Hong Kong were closed for public holiday on Tuesday.

According to a Reuters report on Tuesday, citing housing ministry document, six Chinese provinces – Hubei, Sichuan, Jiangsu, Henan, Guangdong and Liaoning – have been told to reconsider the pre-sale system, which is a key source for builders to finance projects

The ministry has instructed local housing bureaus of these provinces to make an in-depth study of the pre-sale system, and set out reasons why it should be retained or scrapped, the report added.

On Monday, officials in the southern Chinese province of Guangdong denied media reports that emerged on Friday that the government plans to cancel pre-sales arrangements. They, however, did not rule out the possibility that it would be considered in the future.