SHKP unaware of Beijing clampdown message

Finance | Karen Ng and Reuters 21 Sep 2021

Sun Hung Kai Properties (0016) denied rumors of a Beijing clampdown on local real-estate giants after the market crash yesterday, dragged down by local and mainland developers.

It said it never received the authorities' messages and has always adhered to the SAR administration's Land Sharing Pilot Scheme and transitional housing projects.

The Hang Seng Index plunged as much as 1,048 points before closing at 24,099 points - 821 points lower - and was the worst performer amid the slump of global stock markets yesterday.

It dropped 3.9 percent at the midday break to an intraday low of 23,871 points, its biggest loss since late July.

The market has seen a 12 percent loss since the start of this year.

SHKP and New World Development (0017) led the retreat as they plunged by 10 to 12 percent to a one-year low. Henderson Land Development (0012) was the biggest loser, diving 13 percent to close at a six-month low.

JPMorgan Chase estimated that the short-term share prices of local real estate stocks will underperform the market and investors will pay attention to how developers respond to Beijing's demand to ease housing problems.

The broker said New World Development and CK Asset (1113) would face the least downside risks since the two developers have only 14 and 16 percent of their net asset value exposed to Hong Kong residential property. However, Henderson Land is forecast to have a downturn risk of 37 percent, with a 20 percent risk for Sino Land (0083) and Sun Hung Kai Properties.

Ample Capital's asset management director Alex Wong Kwok-ying expected little upside momentum but more downside risk for October, as the recent round of decline has lasted for nearly three months.

Wong expected the HSI to fall to the supporting level of 23,000. The benchmark would not recover to 25,000 quickly because of high policy risks and bearish investment sentiment.

This came amid the US debt ceiling issue and the one-week suspension of the stock connect. The Dow Jones Index opened 400 points ahead, before the Fed meeting later this week.

US Treasury Secretary Janet Yellen issued a fresh plea for Congress to raise the federal debt ceiling on Sunday, arguing a default on US debt would trigger a historic financial crisis.

Yellen has said previously that a default could come in October when the Treasury exhausts its cash reserves and extraordinary borrowing capacity under the US$28.4 trillion (HK$222 trillion) debt limit.

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