By Stanley James and Marco Lui - Sep 12, 2011 1:39 PM GMT+0800 China Overseas Land & Investment Ltd. (688), a builder controlled by the country’s construction ministry, fell to a four-month low in Hong Kong trading after saying property sales in August declined 11 percent.
The Hong Kong-based builder plunged as much as 9.3 percent to HK$14.02 and traded at HK$14.12 as of 1:37 p.m., heading for its lowest level since May 18 on the Hong Kong stock exchange. Property sales last month decreased to HK$4.4 billion ($564 million), according to the company.
China plans to rein in residential prices in smaller cities after limiting home purchases in metropolitan areas including Beijing and Shanghai. The People’s Bank of China has raised interest rates five times over the past year and curbed lending by boosting banks’ reserve requirements.
“We believe China Overseas Land & Investment’s September sales should not be that strong, given the severely weakened home buyer sentiment,” Jinsong Du, Wenhan Chen and Duo Chen, research analysts at Credit Suisse Group AG, said in an e-mailed note today. “ We don’t expect a strong sales turnaround.”
Credit Suisse rated the stock “underperform” with a target price of HK$13.00.
China’s August housing transactions rose 3.6 percent from the previous month as developers started selling homes in new projects on concern the government may impose more tightening policies.
The benchmark one-year lending rate is 6.56 percent and the one-year deposit rate is 3.5 percent.
To contact the reporter on this story: Marco Lui in Hong Kong at mlui11@bloomberg.net
To contact the editor responsible for this story: Gregory Turk at gturk2@bloomberg.net