HONG KONG: Mainland property stocks tumbled in Hong Kong trading yesterday as developers scrambled to raise capital for new projects after concerns that the central government intends to introduce tighter lending restrictions in the property market have eased.

Real estate players raced to offer shares at discounted prices amid a lukewarm market. "This will help property developers get 'easy money' as both A and H shares' valuation is very high at the moment," said Michael Wu, director of Asia-Pacific corporate at Fitch Ratings. "These companies do not have any liquidity and inventory pressure," he added.

Shares in Sinolink Worldwide Holdings Ltd plunged over 17 percent to HK$1.69 after the company announced a share placement at an 8.3 percent discount to the stock's last traded price. The net proceeds from the stock placement will be about HK$525 million, the developer said in a statement to the Hong Kong stock exchange yesterday.

The mainland unit of New World Development, New World China, plunged 7.29 percent to HK$3.81 after saying last Friday that it plans to raise as much as HK$5.33 billion in a rights offer.

Dragged into the falling market, two other leading property players China Overseas Land & Investment and Country Garden also dropped by 1.4 percent and 0.6 percent respectively.

Now that credit tightening no longer appears imminent, developers are jumping at the chance to raise fund while they can, Wu said. "They race to get some cash before a market correction, which can be foreseeable," he said.

Rather than putting listings on hold after Glorious Property's weak trading debut, four mainland developers have already started pre-marketing their initial public offerings and their investor roadshows.

Xiamen Yuzhou Group, Mingfa Group, Excellence Property and Fantasia Holdings Group are reportedly planing to raise a combined US$3 billion by the end of the month.

Shanghai-based Glorious Property was the latest mainland developer listing in Hong Kong. It fell 15 percent below its offering price on debut day and closed yesterday at 22.7 percent below its IPO price of HK$4.4.

Fitch Ratings foresees that the mainland residential property market will definitely "slow down" as developers end the practices of slashing prices to clear inventory, but the long-term risk profile remains "stable". The view is shared by the ratings agency Moody's.

Conditions in the sector are stabilizing and likely to remain so over the next 12 months as a favorable macroeconomic environment has improved buying sentiment and reduced inventory, according to Moody's lead analyst Kaven Tsang.

"The operating environment for the mainland real estate sector has improved with demand for residential properties buoyed by improved sentiment among buyers," said Tsang.

Country Garden said sales during the Golden Week holiday rose 63 percent to 2.2 billion yuan. Gross floor area sold between October 1 and 8 jumped 83 percent from a year earlier to about 410,000 square meters, the company said in a statement issued on Sunday.

(HK Edition 10/13/2009 page4)