By Bingyan Wang


Shares of many Chinese property developers were lower in Asian morning trade, as investor sentiment took a hit after the country's central bank kept its mortgage rate unchanged, exacerbating concerns over problems in the country's property sector.

Property developers' shares fell in both the Hong Kong and mainland markets. The Hang Seng Mainland Properties Index dropped 0.4%, with both Longfor Group Holdings and Seazen Group declining 0.8%. In the mainland market, Poly Developments & Holdings Group dropped 1.3% and China Merchants Shekou Industrial Zone Holdings retreated 1.6%.

China's central bank held the five-year loan prime rate, a reference rate for mortgages, at 4.2% at the August fixing, disappointing traders who had expected more supportive measures to revive the property slump. Meanwhile, the one-year loan prime rate was lowered by a smaller-than-expected 10 basis points to 3.45%.

Property easing has been relatively "piecemeal and modest" and no "meaningful" fiscal spending has yet to be announced, UBS economists say in a note. The investment bank said "China's economic growth has decelerated since April as the property downturn deepened."

Problems are mounting for China's property sector after Beijing vowed to deflate the property bubble two years ago.

July economic-activity data released earlier this month indicated that the world's second-largest economy is cooling further and slipping into deflation territory.

UBS on Monday joined JPMorgan and Barclays in downgrading China's economic growth forecast. Economists led by Tao Wang cut their 2023 GDP growth forecast to 4.8% from 5.2% previously.


Write to Bingyan Wang at bingyan.wang@wsj.com


(END) Dow Jones Newswires

08-20-23 2337ET