Shares in a range of property companies in China have fallen today (March 18th).
Stocks slipped in various firms after reports in the media indicated that Chinese developer Zhejiang Xingrun Real Estate cannot repay hundreds of millions of dollars worth of loans.
It is believed the business owes $400 million (£240 million) and investors panicked on the news, with shares in firms such as Poly Real Estate Group falling as a result. The company, which is listed in Shanghai, saw its shares slide by almost three per cent, while there was also a two per cent fall in the value of Shenzhen-listed China Vanke.
One of the reasons for the problems facing Zhejiang Xingrun Real Estate at the present time is the fact that statistics released by Chinese government agency the National Bureau of Statistics show that the average price of a new home in 70 Chinese cities is now growing at a slower pace than in recent months.
Prices in Beijing and Shenzhen were revealed by the latest data to be up by just 0.2 per cent, which is the slowest pace recorded by the body since October 2012.
Struggling property sector
Property developers are a particular concern for investors in China right now because they have increased their levels of debt in order to buy more land in recent years, placing them at risk of defaulting unless they can improve their income.
Despite the problems for property stocks in China today, there was a different picture on the Nikkei during the session, with the index bouncing back from the six-week low it hit yesterday. The Nikkei ended the day almost one per cent up compared to the start, while the Shanghai Composite Index was up 0.3 per cent at 2,029.66 points.
The China Enterprises Index of the top Chinese listings in Hong Kong was higher today, gaining 0.3 per cent and the Hang Seng Index was up 0.5 percent at 21,577.10 points, reports Reuters.
"There may be a chance for some technical rebound but because there is no good news right now, so I don't think the rebound momentum will be too great," said Linus Yip, strategist at First Shanghai Securities.
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