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Hong Kong real estate moguls take $ 6.7 billion against China fears

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(Bloomberg) – Families behind Hong Kong’s four major real estate giants saw $ 6.7 billion wiped out in their asset values ​​on Monday as investors headed for the exit, fearing Beijing would order price controls housing.

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Real estate developers led the losses on the benchmark Hang Seng on Monday, with the so-called Big Four owned by the city’s most powerful tycoons suffering some of the biggest drops. Fears of contagion linked to the liquidity crisis of the China Evergrande group increased the selling pressure.

Shares of Lee Shau Kees Henderson Land Development Co. fell 13%, the largest drop since 2008, while family Cheng New World Development Ltd. has seen its stocks fall the most in 7 years. Li Ka-shings CK Asset Holdings Ltd. and Sun Hung Kai Properties Ltd., owned by the Kwok family, also took the plunge.

The rout was sparked on Friday by a Reuters report that said Chinese officials have asked developers in Hong Kong to redirect resources to help solve a housing shortage. This has raised fears that President Xi Jinping’s political agenda for common prosperity, which has swept away vast swathes of industry on the mainland, may finally spread to the city’s real estate companies and the source of wealth for the tycoons. .

People may worry about whether they have to take on additional responsibility to build more subsidized housing, said Philip Tse, head of property research in Hong Kong and China Bocom International.

Investors are already pissed off by Beijing’s regulatory assault on tech, education and casino companies as Xi seeks to tackle social inequality. Hong Kong’s real estate prices, the most expensive in the world, have sparked social unrest and have been blamed by Chinese authorities for contributing to the 2019 pro-democracy protests.

In July, the top Chinese official in Hong Kong, Xia Baolong, set a goal of eliminating his notoriously small homes by 2049. In March, Chinese Vice Premier Han Zheng bemoaned a housing crisis. Quoting an unidentified person close to mainland officials, Reuters reported that China would no longer accept monopoly behavior.

The main concern is that Beijing will ask the Hong Kong government to impose price caps and purchase restrictions, said Raymond Cheng, head of real estate research on China and Hong Kong at CGS-CIMB Securities. However, the chances of Hong Kong adopting the same housing policies as the mainland are low, given that the government has reiterated the principle of a two-system country, Cheng wrote in a note.

Hong Kong chief executive Carrie Lam is scheduled to deliver her 2021 political speech on October 6.

More stories like this are available at bloomberg.com

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