China property stocks slide after housing policies report

HONG KONG Tue Jan 8, 2013 10:41am IST

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HONG KONG (Reuters) - Chinese property stocks such as China Resources Land Ltd (1109.HK) fell on Tuesday after an official newspaper said stricter implementation of housing policies was needed to curb real estate prices, snapping strong gains for the sector in recent weeks.

China Resources Land, which gained nearly 70 percent last year and hit a record high on Monday, fell 2.7 percent after the China Securities Journal said strict implementation of policies was necessary to ease rising home prices.

The newspaper reported on Tuesday that strict implementation of policies was a focus for regulating the property sector, as the market was expecting a new round of upward pressure after home prices rose in the past seven months.

"There's a lot of liquidity floating around in Hong Kong, so investors have to park their money somewhere in this risk-on environment," said Lee Wee Liat, Asia head of property research at BNP Paribas, explaining the rally in Chinese property shares.

"There won't be anything too draconian from Beijing, but if prices rise any more from here, I'd expect them to pre-emptively intervene by threatening to take away pre-sales rights and other measures that will hurt developers," Lee added.

Jinsong Du, a property analyst at Credit Suisse, said further tightening measures were unlikely before the formal leadership transition in March.

"It shouldn't have much impact on the market," Du said. "The market now has a stronger immunity system to property policies."

The property subindex in Shanghai .SSEP fell 1.24 percent, lagging a 0.36 percent loss in the benchmark Shanghai Composite Index .SSEC.

China Overseas Land & Investment Ltd (0688.HK), the country's largest property developer by market value, dropped 1.4 percent, while Agile Property Holdings Ltd (3383.HK) fell 4.4 percent.

(Reporting By Yimou Lee and Clement Tan; Editing by Chris Gallagher)

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