Bloomberg News

Agile Leads Gain in Real Estate Stocks on ‘Emerging’ Value

October 06, 2011

(Updates with closing share price in second paragraph.)

Oct. 6 (Bloomberg) -- Agile Property Holdings Ltd. led gains in Hong Kong-listed Chinese property stocks after Deutsche Bank AG said it sees “emerging” value for long-term investment in the developers.

Agile surged by a record 20 percent to HK$5.28 at the close in Hong Kong trading. China Overseas Land & Investment Ltd., the biggest Chinese developer listed in Hong Kong, climbed 17 percent, and Longfor Properties Co. gained 11 percent.

Chinese developers’ shares had plummeted as the country expands its property control measures, raising down-payment requirements and mortgage rates this year to ease gains in home prices. The government said in July it will rein in prices in smaller cities after limiting home purchases in markets such as Beijing and Shanghai.

“After the recent sell-offs, we see value emerging for a longer-term investment,” Tony Tsang and Jason Ching, analysts at Deutsche Bank, wrote in a note to client yesterday. “We recommend picking up the high-quality developers with a strong financing capacity.”

Half of the 10 biggest decliners in the past month on the MSCI China Index, made up mostly of Chinese companies traded in Hong Kong, were property-related companies including Agile.

‘Increasingly Severe’

Chinese developers face an “increasingly severe” credit outlook, which may force them to cut prices and turn to costlier funding as sales weaken, Standard & Poor’s said on Sept. 27. A 30 percent decline in sales may leave many developers facing a liquidity squeeze, S&P said after conducting stress tests of the nation’s real estate companies.

Fewer than half of the 70 cities monitored by the government in August posted month-on-month gains in home prices for the first time, according to Samsung Securities Co. The banking regulator is also looking into financing of developers through trust companies as part of a broader evaluation of loans, a person familiar with the matter said two weeks ago.

Guangzhou R&F Properties Co. rose 7.4 percent and China Resources Land Ltd. was 10 percent higher. The benchmark Hang Seng Index increased 5.7 percent.

--Editors: Linus Chua, Andreea Papuc

To contact the reporter on this story: Marco Lui in Hong Kong at mlui11@bloomberg.net

To contact the editor responsible for this story: Andreea Papuc at apapuc1@bloomberg.net


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