Hong Kong markets shrug off plunge in property stocks after stamp duty rise

Property stocks in Hong Kong slipped to three-month lows on Monday after the government’s decision to increase stamp duty, but the markets shrugged off the losses to move higher.

The Hang Seng Index closed up 0.7 per cent or 158.78 points to 22,801.4 points, while the Hang Seng China Enterprises Index was up 1.23 per cent at 9,608.24 points.

Stocks of property developers sank to three-month lows after Friday’s announcement that non first-time individual and corporate buyers would be required to pay a 15 per cent stamp duty. The move comes ahead of an election campaign where housing affordability is likely to be a central issue.

Sun Hung Kai Properties fell 9.88 per cent to HK$104, Cheung Kong Property Holdings slipped 8.81 per cent to HK$52.80 while New World Development fell 9.03 per cent to HK$8.87. Henderson Land Development also dropped 5.79 per cent to HK$43.10.

Morgan Stanley analyst Praveen Choudhary said he expected to see near-term negative impacts on volume and margin – and therefore stock prices, from the new rules.

“Stocks could see de-rating as the regulatory pressure came earlier than expected, and there could be margin pressure for developers if they sell at a discount.”