‘No One Immune’ Amid China Property Turmoil, JPMorgan Says

(Bloomberg) — Chinese developers may report a 30% year-on-year decline in first-half earnings due this month, which will likely weigh on sentiment, according to JPMorgan Chase & Co. analysts.

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“No one is immune” amid the industry turmoil and investors’ concerns about the liquidity of most private developers are set to linger, analysts including Karl Chan wrote in a note Sunday, as they downgraded developers including CIFI Holdings Group Co. and KWG Group Holdings Ltd.

At least $90 billion has been wiped out in China’s real-estate stocks and dollar bonds this year, and a bursting housing bubble and an intensifying debt crisis threaten to inflict even more pain. Pessimism has deepened after Beijing signaled that homeowners, not builders, will be the priority in the authorities’ efforts to stabilize China’s slumping housing market.

Most developers’ shares tracked a decline in the broader market on Monday. A Bloomberg Intelligence gauge of builders fell as much as 0.7% to head for its first decline in three days.

Chinese high-yield dollar bonds, which are dominated by issuance from property developers, gained about 0.5-1 cent on the dollar Monday, according to credit traders.

China’s home prices fell 0.1% in July, down for an 11th month, underscoring how government relief efforts have so far failed to curb the nation’s spiraling real estate crisis.

The banking regulator said Friday that it will meet developers’ “reasonable financing demands effectively” and support their mergers and acquisitions and restructuring of property development projects.

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However, the analysts said until there are stronger policy responses and proof of a recovery in sales, the sector’s shares are likely to remain lackluster. The brokerage doesn’t expect companies that are still suspended from trading — including China Evergrande Group and Shimao Group Holdings Ltd. — to release first-half results, and there’s also a risk of non-publication for others.

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To be sure, there might be a potential short-term rebound in September due to an improvement in month-on-month sales during a traditional peak season, and speculation about strong policy support from the central government after a key party meeting, the analysts wrote.

Why China’s Developers Are Facing Mortgage Boycotts: QuickTake

(Adds stock and bond moves and July home prices in fourth to sixth paragraphs)

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