China's Shimao scraps share sale plan due to real estate curbs

SHANGHAI: Property developer Shanghai Shimao Commercial Group, said on Thursday, June 10 it would scrap a 1.7 billion yuan (US$249 million) share placement plan due to government curbs on real estate.

"Because there have been major changes in government policies toward the property sector since the second quarter of 2010," Shimao's board has decided to cancel the plan, the company said in a statement to the Shanghai Stock Exchange.

China has tightened monetary policies, raised mortgage rates and banned loans for third homes this year to cool its property market, triggering a plunge in property stocks and forcing many developers to delay or abandon fundraising.

China Merchants Property Development Co, a mid-sized developer, said on May 13 that it would scrap its 4 billion yuan share placement due to a slump in its share price after government tightening.

Shimao unveiled plans last August to sell up to 150 million shares to select institutional investors at 13.81 yuan apiece, aiming to raise as much as 1.7 billion yuan to fund expansion.

The stock has tumbled 23% since, closing at 10.45 yuan on Wednesday and making it impossible for Shimao to go ahead with the orginal plan. — Reuters