(Bloomberg) — Shimao Group Holdings Ltd.’s shares and bonds tumbled again, sparking renewed concern over the health of China’s property sector and weighing on other developers. JPMorgan Chase & Co. analysts downgraded Shimao, citing liquidity concerns.
Economic activity in China likely slowed in November due to the worsening downturn in the property sector and still subdued consumption. Growth in fixed-asset investment probably weakened last month, according to the median estimate in a survey of economists.
Shimao’s shares dropped as much as 12.9% Tuesday to the lowest in a decade after plunging 12% a day earlier. The property firm’s dollar bonds also fell again, pushing down other Chinese high-yield notes with them. A gauge of property developer stocks fell for a third day.
Key Developments:
- What’s Next for China Evergrande, Crushed by Debt: QuickTake
- China Developers Sink as Shimao Deal Stokes Governance Concern
- Shimao Deal Is ‘Red Flag’ Amid Liquidity Concern, JPMorgan Says
- Evergrande’s Hui Forced to Sell Part of Stake in Defaulted Firm
- Hard Landing in Property Market Would Crater China’s Economy
Shimao Bonds Lead Debt Drop (11:30 a.am. HK)
Chinese high-yield dollar bonds fell as much as 2 cents on the dollar Tuesday morning with Shimao leading declines, according to credit traders.
Shimao’s 4.75% bond due 2022 fell 3 cents to 76.7 cents as of 9:50am in Hong Kong, according to Bloomberg-compiled prices. Its 6.125% note due 2024 dropped 3 cents to 69.1 cents. Both are poised to extend Monday’s drop which was the biggest loss since Nov. 5.
Fantasia Denies Take-Over Reports (11:26 a.m. HK)
Fantasia Holdings Group Co. and its unit Fantasia Investment Holdings haven’t been taken over by creditors as reported by some media outlets, the property developer says in a statement posted on its WeChat account. They didn’t specify the reports.
JPMorgan Cuts Shimao to Underweight (9:56 a.m. HK)
JPMorgan downgraded both Shimao Group and Shimao Services Holdings Ltd. to underweight from overweight, citing “heightened concerns on liquidity.”
There’s been “no new concrete policy” from the Central Economic Work Conference and, while government policies lean toward easing, there’s not a “180-degree change,” analyst Karl Chan wrote in a note.
China Economic Activity Likely Slowed (8:23 a.m. HK)
Economic activity in China likely decelerated in November due to the worsening downturn in the property sector and still subdued consumption.
Growth in fixed-asset investment probably weakened last month, dragged down by sluggish property investment, according to the median estimate in a survey of economists ahead of data due to be released Wednesday morning.
Amundi Says Crackdown May Boost Funds (7:59 a.m. HK)
China’s crackdown on the property sector, which has sparked defaults at China Evergrande Group and others, should provide a lift to stocks and bonds as investors shift away from real estate, a top executive at Amundi SA said.
“We are going to see money flowing from real estate investments to capital markets investments,” said Xiaofeng Zhong, chairman of Amundi’s business in the Greater China area. “The government is encouraging funds flowing into the financial market.”
Shanghai Shimao to Sell Assets to Shimao Services for 1.65 Billion Yuan (6:04 p.m. HK)
Shanghai Shimao Co. has agreed to sell property management assets and related value-added services to Shimao Services, another company controlled by Chinese property tycoon Hui Wing Mau, according to a statement to the Shanghai stock exchange. The deal will bring about 1.16 billion yuan ($182 million) of profit to Shanghai Shimao.
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