China Property

China Property: China property developers led the decline in Chinese stocks today, with the nation’s largest developers China Vanke and Poly Real Estate both declining at least 1.7%. The decline came amidst recent news that Zhejiang Xingrun Real Estate had defaulted on its bank loans, and remains on the brink of bankruptcy, stoking concerns of a sharp property market correction that could lead to a systemic crisis in China. The bearish mood was further ‘soured’ after the shares of another listed developer, Country Garden plunged 6.2%, following the departure of its CFO. According to Bloomberg, the negative outlook has led to traders doubling their bearish bets on some of China’s biggest developers that trade in Hong Kong, with short interest in Evergrande Real Estate Group at 8.4% yesterday compared to just 3.2% a year ago. Shorts on Guanzhou R&F and Agile Property are at their highest levels since Dec ’12. The news flow does not bode well for sentiment on SGX-listed property counters with exposure in China. Key names that may be negatively impacted: CapitaLand, CapitaMalls Asia, Keppel Land, Yanlord, Ying Li and Ho Bee.