Hong Kong stocks fell by the most in three weeks on Monday on fears that China’s real estate woes could worsen after China Evergrande Group, the world’s most indebted developer, canceled creditor meetings, dealing a setback to its debt restructuring plans .
The Hang Seng index fell 1.8 percent to 17,729.29 at the close of trading, extending last week’s 0.7 percent decline. The Hang Seng Tech Index fell 2.7 percent and the Shanghai Composite Index fell 0.5 percent.
Real estate stocks led the pack of losers after China Evergrande said it would scrap six creditor meetings scheduled for this week due to weaker-than-expected sales. Longfor Group fell 6.5 percent to HK$14.16 and Country Garden Services Holdings fell 4.3 percent to HK$8.21. E-commerce platform JD.com fell 4.1 percent to HK$115.40, hitting a record low, and Tencent Holdings fell 2.9 percent to HK$304.40. China Evergrande fell 22 percent to HK$0.43 after it said in another stock exchange filing that it was unable to meet regulatory requirements for new bond issues. China Aoyuan Group, a smaller real estate developer, plunged 72 percent to HK$0.325 as the shares resumed trading after being suspended due to a debt restructuring on March 31 last year.
“China’s housing crisis is far from over and that will lead to an overhang on stocks,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “The real estate market is crucial to China’s economy due to its size and importance. No other industry can replace it as an economic stabilizer in the foreseeable future.”
The real estate sector alone accounted for 6.1 percent of China’s economy last year, and industries related to the real estate market can account for about a quarter of the economy, according to China Galaxy Securities.
Last week, local stocks fell for a third straight session as traders feared China’s gradual stimulus measures would not be enough to stem a slowdown in economic growth. So far, Beijing has cut mortgage rates for first-home purchases, lifted purchase restrictions in some major cities and lowered banks’ reserve requirement ratios, but that hasn’t pleased investors. The Hang Seng Index fell more than 6 percent in the three months to September, pointing to a second straight quarterly loss.
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Four companies made their trading debuts on Monday. LC Logistics fell 0.6 percent to HK$5.10 and Wuhan YZY Biopharma was unchanged from its offer price of HK$16 in Hong Kong. Jiangsu Hengxing New Material Technology, which makes chemical products, rose 19 percent to 30.54 yuan in Shanghai and Anhui Wanbang Pharmaceutical Technology rose 9 percent to 74 yuan in Shenzhen.
Elsewhere, mainland-traded suppliers of Huawei Technologies rose sharply ahead of telecom equipment makers launching new products that could potentially include smart cars and MatePad Pro. Wuhu Sanlian Forging rose by the 10 percent daily limit to 40.73 yuan and Dongguan Chitwing Technology also rose by the same amount to 39.53 yuan.
Other major Asian markets were mixed. Japan’s Nikkei 225 rose 0.9 percent, while South Korea’s Kospi fell 0.5 percent and Australia’s S&P/ASX 200 rose 0.1 percent.