Chinese real estate and banking stocks fell on Thursday amid fears that debt problems in the real estate sector would affect lenders as more homebuyers threatened to halt mortgage payments.
According to official media, a growing number of home buyers have threatened in recent weeks to stop paying mortgages if real estate developers do not resume construction of precautionary housing.
The “stop mortgage repayment” move has spread to more than 100 real estate projects in several Chinese provinces, the Securities Times reported Thursday.
Also in AF: protests against China’s property threaten $ 220 billion for banks
The CSI300 Bank index fell to 3.3% in early operations, reaching its lowest level since March 2020.
Chinese developers listed on the mainland and Hong Kong also fell.
Fierce sales
“People are worried that this could hurt bank lending and affect other projects that have no problems,” said Steven Leung, executive director of institutional sales at UOB broker Kay Hian in Hong Kong.
Smaller lenders suffered fierce sales.
China Merchants Bank fell as much as 6.3%, while Bank of Chengdu lost 5% earlier in the day.
Also in AF: Two provinces of China to pay depositors after rare protests
“The fall in China’s ownership may ultimately negatively affect land financial institutions after reaching the offshore high-yield dollar bond market,” wrote Nomura chief economist Ting Lu.
“A disorderly deleveraging can cause not only a credit crunch for developers and massive defaults in offshore dollar bond markets, but also an increase in delinquent lending to banks, which are at the heart of China’s financial system.”
- Reuters with additional edition by Jim Pollard
ALSO READ:
China’s real estate reform could increase mortgage demand
China cuts mortgage reference rate to boost economy
China’s four largest banks are lowering mortgage rates in Guangzhou
Jim Pollard
Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd newspapers in Sydney, Perth, London and Melbourne before traveling through Southeast Asia in the late 1990s. He was a senior editor of The Nation for over 17 years and has a family in Bangkok.