By Chris Oliver, MarketWatch
HONG KONG (MarketWatch) -- Hong Kong property stocks retreated Wednesday after the city’s leader, Chief Executive Donald Tsang, said the government will temporarily amend an immigration scheme that grants residency to foreigners who invest in the city.
The move is an apparent effort to cool soaring prices in the local property market. Under the current scheme, non-residents can obtain rights to live in Hong Kong, if they invest a required sum in local assets, that can include real estate. Tsang said in his annual policy address that the government would temporarily remove real estate from the class of eligible assets, with effect from Thursday.
“Despite the fact that real estate investments under the scheme in recent years have only represented about one percent of the total market turnover, the government, in view of public concern, has decided to temporarily remove real estate from the investment asset classes under the scheme,” Tsang told lawmakers.
Tsang did not elaborate how long the suspension would last, nor did he provide details on what factors would be considered when reviewing the scheme.
The investment scheme has been popular with wealthy mainland China investors who purchased apartments to gain residency rights in Hong Kong.
Property stocks fell sharply in the minutes following the announcement, with the sector ending the morning session 2.1% lower versus a flat performance for Hong Kong’s Hang Seng Index (HK:HSI 23,280, +158.47, +0.69%) , which traded little change.
Individual developers, which had gained in early trading, reversed direction to end the morning trade with sizeable losses. Shares of Hang Lung Properties Ltd. (HK:101 37.95, -0.40, -1.04%) fell 0.8%, while Cheung Kong Holdings Ltd. (HK:1 117.90, -0.60, -0.51%) (CHEUY 15.34, -0.17, -1.10%) lost 2.5%, and Sun Hung Kai Properties Ltd. (HK:16 134.70, -2.00, -1.46%) (SUHJY 17.61, -0.04, -0.23%) , the city’s most valuable developer by market capitalization, plunged 4.2%.
