Shares in Chinese real estate companies are getting hammered

JEWEL SAMAD / AFP / Getty Images
  • The CSI300 real estate index has slumped by more than 13% this week.
  • The falls may be due to further crackdowns by Chinese regulators on speculative buying activity.

China’s benchmark Shanghai composite index is under pressure again in afternoon trade, and a short time ago was down almost 3% for the week.

Those falls pale in comparison to the CSI300 real estate index, which has been absolutely crushed amid the broader market selloff.

The broader CSI300 index is comprised of the largest 300 companies across China’s two stock indexes in Shanghai and Shenzhen.

Shares in listed Chinese real estate companies have slumped by more than 13% this week. The index has now fallen since 35.6% since January 21, leaving it at the lowest level since May 2017:

Thomson ReutersCSI300 Real Estate Index Daily Chart

According to the China-focused Twitter account YuanTalks, the latest price falls can be at least partly attributed to a further crackdown by Chinese regulators.

The moves are part of ongoing efforts to reduce speculative activity in China’s real estate market.

Other reports indicate that the China Development Bank is stepping up its oversight of home sales in lower-tier cities, following an explosion of development activity.

In addition to the three provinces listed above, a report in Bloomberg described a flood of buying activity in the province of Hainan this year, after the government declared it an economic zone.

Locals authorities responded to the surge in demand by imposing restrictions such as length-of-residence requirements and deposits of as much as 70%.

Amid the lingering threat of escalating trade tensions with the US, there’s been a number of other developments in Chinese markets this week.

On Sunday, the People’s Bank of China reduced the reserve amount of cash that major Chinese banks are required to hold, in order to try and free up around 700 billion yuan ($US108 billion) of liquidity.

Then earlier today, the PBOC slightly reversed course and drained about 150 billion yuan from the system.

China’s currency is also under pressure, with the yuan falling to its lowest level against the US dollar since December 2016.

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