Sweeping regulatory changes for China‘s crisis-hit property sector announced last week sent shares in smaller developers sharply lower amid expectations of more industry consolidation.
China on Friday issued measures to wean property developers off their reliance on funds collected from buyers before housing projects are completed, as Beijing seeks to restore confidence in the sector.
The CSI300 Real Estate Index was down 2% in early morning trading. A index tracking Hong Kong-listed Chinese developers dropped roughly 4%.
The new measures “have raised the bar for developers in terms of their financing ability and management skills,” Everbright Securities said in a note to clients.
The measures will speed up industry consolidation, as “most small players will not be able to make a profit and have to exit the market,” it added.
Shenzhen Special Economic Zone Real Estate & Property Group and and Shenzhen Heungkong Holding Co both fell roughly 5%. Shenzhen Tellus Holding Co lost nearly 8%.
Reuters
