Asia stock markets weaken amid ongoing retreat from Chinese property sector

By Scott Murdoch

SYDNEY (Reuters) – Asia stock markets weakened on Monday as investors in China sold off shares in property developers, remaining unconvinced by authorities’ efforts to revive activity in the mainland real estate market.

MSCI’s broadest index of Asia-Pacific shares outside Japan was down 0.3%, after U.S. stocks ended the previous session with mild gains.

Australian shares reversed earlier losses to be up 0.12% and Japan’s Nikkei stock index slid 0.19%.

In Hong Kong, the Hang Seng Index was down 1.4%, as investors retreated from China’s troubled property sector.

The Hang Seng Property Index, a gauge of Hong Kong’s top developers, shed almost 4% while the mainland property index was off 3.24%.

“We need the property market to stabilize first in order for any meaningful kind of economic rebound to happen in China,” said David Chao, Invesco’s Asia Pacific market strategist.

“We are not calling for a property rebound but we want to see some stability.

“We are seeing investment down in the mid to high single digit level year on year, there is still softness in those tier 2 and 3 cities which is why we have seen a slew of measures in those areas. Those should put a floor under the property market some time soon.”

In recent weeks China’s authorities – including the housing ministry, central bank and financial regulator – have rolled out a series of measures, such as easing borrowing rules, to support the debt-riddled property sector, and there are some expectation for more steps to revive demand in major ciities like Beijing, Shanghai and Shenzhen.

Hong Kong stocks were also dampened as e-commerce giant Alibaba Group dropped 3.1% on the surprise departure of outgoing CEO Daniel Zhang from its cloud unit.

China’s bluechip CSI300 Index was up 0.37%.

In the United States, the Consumer Price Index (CPI) for August, due out on Wednesday, is expected to rise 0.6% month-on-month for August, which would take the year on year rate to 3.6%, according to a Wells Fargo research note.

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