HK Stock Market Move | Homebuilders' shares lead the declines as the new real estate policies are fully implemented, tightening developers' liquidity. Market share may further concentrate.

The stocks of domestic property companies experienced significant declines. As of the time of writing, C&D INTL GROUP (01908) dropped by 5.65%, trading at HKD 12.19; GREENTOWN CHINA (03900) fell by 2.64%, priced at HKD 6.095; and SUNAC (01918) decreased by 2.48%, now at HKD 0.59. In terms of the news, on August 28, multiple departments including the Ministry of Housing and Urban-Rural Development, the People's Bank of China, and the financial regulatory bureau issued new policies for the real estate sector. China Securities Co., Ltd. pointed out that the increased thresholds for sales of existing homes and presales will lead to a phase-wise contraction in the supply of new homes, putting temporary financial pressure on property developers. Analysts noted that under the new policies, asset turnover and internal rate of return (IRR) could drop to a quarter of their original levels, raising concerns about the short-term profitability of real estate companies. CMB International believes that the comprehensive implementation of these policies will tighten developers' liquidity and extend the capital recovery period from 3 to 6 months to 6 to 12 months, accelerating the exit of small developers facing capital shortages and further concentrating market share among state-owned enterprises. On the demand side, this could reduce the risks of unfinished projects and delayed deliveries, which would help boost buyer confidence. The bank views this reform as a key measure to "exchange short-term pain for the long-term health of the industry," demonstrating the regulators' proactive stance in breaking the vicious cycle within the industry.