China property management stocks tumble as Beijing tightens its grip

(Bloomberg) – Chinese property management stocks fell on Monday after Beijing pledged to “dramatically improve order” in the market and regulate a wide range of industrial activities.

The Hang Seng Property Service and Management Index, which tracks Chinese property services companies, fell 14%, the highest level since its inception in April, on the verge of hitting a record low. Industry leader Country Garden Services Holdings Ltd. fell 17%, while Shimao Services Holdings Ltd. lost up to 30% in Hong Kong.

The declines came as a selloff of Chinese private education companies sent shockwaves through the stock market. Investors rushed to assess the growing risks of an intensification of Beijing’s crackdown on some of the country’s industries, from technology to education and real estate.

Regulators issued a statement on Friday afternoon, promising to step up surveillance of the real estate sector. Property management fees that are not explicitly disclosed, or more fees collected than originally intended, will be prohibited, according to the statement.

Morgan Stanley downgraded its view of the sector from attractive to compliant, saying the prospect of deleveraging in the sector will be negative for stock performance.

“Continued deleveraging may affect developers’ ability to acquire land and growth prospects, leading to marginal downside risks to property management company gross contract area growth,” analysts including Chloe wrote. Liu.

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