Chinese government tightens the noose on property
Most Asian indices fell yesterday, with China and Hong Kong leading the decline. The HSI decreased 1.5% while the China A50 Index slid 5.6%, its biggest fall this year. The index poor performance came after Chinese property developers were slapped with more tightening measures in a bid to curb the runaway housing prices in the country.

China’s cabinet had demanded for an increase in required down payments and loan rates for buyers of second homes, in cities with “excessively fast” price gains. Also, individuals selling properties have to “strictly” pay a 20% tax on the sales profit if the original purchase price is available. To further dampen sentiments, real estate companies found hoarding land or collaborating to push up home prices will be barred from getting new development loans or raising funds in capital markets. (Bloomberg)

Chinese developers underperform
After the announcement, investors sold off shares of developers with exposure to China on Monday. Some of the Chinese developers who took the hit were, Yanlord (-6.8%, $1.43), CapitaLand (-3.6%, $3.72), GLP (-1.2%,$2.52) and CMA (-1.9%, $2.03). The STI index fell 0.9% to close at 3,239.95 yesterday.

GLP slides after GIC sell stake
GLP fell 9.4% this year, with its largest decline of 6.6% registered on 26 February. The selling came after GIC, Singapore’s sovereign wealth fund said that it is seeking to raise funds by selling part of its stake in GLP.

The investment company sold 595.7 million shares at $2.60, which was a 5.5% discount compared to 25 February’s closing price. The share sale is part of GIC’s rebalancing of its holdings, according to an emailed statement to Bloomberg. GIC maintains that it is still “confident of GLP’s long term prospects” and that it remains a “substantial” long-term shareholder.

CMA CEO steps down
Unlike GLP, CMA added 4.6% this year. This came after CMA announced that its subsidiary, Shanghai Yongwei increased its registered capital in order to fund the development and working capital requirements of the company. Elsewhere, CMA announced last Friday that Liew Mun Leong will retire as chairman of the company with effect from 24 April and Mr Ng Kee Choe will succeed Mr Liew.

Source: Macquarie Research - 5 Mar 2013