http://www.businesstimes.com.sg/sub/...43103,00.html?
Published June 14, 2011
Property stocks shaken by China chill
A sector already facing supply glut at home now wrestles with prospect of downturn in China
By UMA SHANKARI
(SINGAPORE) Singapore-listed property stocks with significant exposure to the Chinese market fell yesterday as data from China raised concerns that a slowdown in the world's second-largest economy could lead to easing demand for homes.
China's lending tumbled in May and money supply grew at the slowest pace since 2008, adding to signs that its economy is cooling.
CapitaLand, Singapore's largest property group by market capitalisation, lost five cents or 1.7 per cent to close at $2.91 - slipping below the key $3 support level for the second trading day in a row.
City Developments, the second-biggest developer by market cap, also shed 22 cents or 2.1 per cent to end at $10.44. Keppel Land lost 16 cents or 4.2 per cent to close at $3.68.
These three stocks are now at their lowest points in at least the last one year.
Other developer stocks fared even worse. China-based Yanlord Land Group lost three cents or 2.3 per cent to close at $1.25 yesterday. Its share price is now at the lowest point since September 2006.
CapitaLand retail unit CapitaMalls Asia, which was spun off and listed in November 2009, lost five cents or 3.2 per cent to close at $1.50 - marking an all-time low. The stock's initial public offering price was $2.12.
Analysts attributed the fall in property stocks mainly to rising concerns about China.
CIMB analyst Donald Chua noted that most of the developers hit yesterday have significant exposures to the Chinese market.
'Data that came in today (Monday) showed larger-than-expected declines in loans disbursed in China,' said Mr Chua. 'Asset inflation and property prices are watched very closely by policymakers regionally.'
China released data late last Friday showing a smaller-than-expected trade surplus of US$13.1 billion in May because of soaring imports and weaker growth of global demand.
And figures released yesterday showed that Chinese banks extended fewer new loans than expected in May.
'This provides another data point highlighting the growth risk,' Tao Dong, a Hong Kong-based economist for Credit Suisse, told Bloomberg. 'I think the economy is heading to a soft landing in the second half of 2011, but the risk of a hard landing seems to be on the rise.'
Reacting to the news, Hong Kong imposed new measures last Friday in its fourth attempt since October 2009 to dampen property prices, increasing the supply of land available to build homes and tightening mortgage restrictions.
Hong Kong-listed industry bellwethers Cheung Kong (Holdings) and Sun Hung Kai Properties fell yesterday morning on the news.
But for Singapore-listed property stocks, sentiment was already hit last Thursday after the government announced that it will release another bumper supply of land for private homes in the second half of this year. It also warned home buyers to be mindful of the potential supply.
This led to speculation that another round of demand-side measures to cool the property market could be on the way. CIMB is 'underweight' on the property sector, partly due to policy risk.
'Future physical completions (both private homes and HDB flats), tightening policies (we do not see the government loosening its grip anytime soon), interest rate risk (likely a mid to longer-term threat) are issues the market will need to grapple with for a while longer,' Mr Chua said.
Said Morgan Stanley: 'We maintain our cautious industry view as we continue to see risk of oversupply in terms of physical completion and units available for sale, and we see residential prices falling 7 per cent over the next two years.'
The slide in property stock prices came as the benchmark Straits Times Index fell again yesterday. The index shed 0.63 per cent, or 19.31 points, to close at 3,059.04 - its lowest levels in over two months.
Analysts said that coupled with worries about China, the investors are also plagued by concerns over the European sovereign debt issue and the US economy.
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