Hong Kong stocks struggle as property developers slide on China tax plan while oil firms and HSBC advance

China expanded a property-tax trial to more cities while a resurgence in Covid-19 cases kept risk appetite at bay

Oil firms advanced as Brent crude traded above US$85 a barrel on tighter supply outlook; HSBC gained after third-quarter earnings beat

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Stocks struggle to break past a six-week high as property developers slide after China expanded a trial to tax property owners in more cities. Photo: EPA-EFE

Published: 10:45am, 25 Oct 2021Updated: 5:01pm, 25 Oct 2021

Hong Kong stocks struggled to advance beyond a six-week high as Chinese property developers tumbled after the government expanded a trial to tax property owners in more cities to rein in home prices. Gains in oil and biotech companies steadied the market.

The Hang Seng Index rose less than 0.1 per cent to 26,132.03 at the close on Monday. Developers Longfor Group and Country Garden were among the worst benchmark performers with at least 1.9 per cent slide, while WuXi Biologics and PetroChina climbed more than 1 per cent. The Hang Seng Tech Index slipped 0.1 per cent.

The Shanghai Composite Index added 0.8 per cent. A gauge of mainland-listed developers sank 1.9 per cent. The nation’s biggest developer by sales China Vanke and Jinke Property Group retreated by more than 3.6 per cent.

China will tax owners of residential, commercial properties and lands in more cities, the state-run Xinhua News Agency said over the weekend, without giving any details. The trial will last for five years before it is signed into law, it added. The decade-old trial has so far been confined to Shanghai and Chongqing.

“We are neutral to this news, but expect investors to turn more cautious in the near term until there is more clarity on scheme details,” analysts led by Stephen Cheung at Jefferies wrote in a note. “We expect [property] sales to remain weak and more meaningful easing to come in December.”

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