SIOPF - Chinese real estate stocks tumble after Shimao Group transaction

In the wake of China Evergrande's (OTCPK:EGRNF) (OTCPK:EGRNY), the Chinese real estate sector gets another blow as J.P. Morgan downgrades Shimao Group (OTCPK:SIOPF -32.4%) and its property-services unit, as a transaction between the two companies flashes warning signs, according to a Bloomberg report. The downgrade comes after Shimao Group (OTCPK:SIOPF) agreed to sell its property management services businesses and related value-added services to Shimao Services (OTCPK:SHMSY) for 1.65B yuan ($259M). Evergrande (OTCPK:EGRNF) drops 6.7%, Nam Tai Property (NYSE:NTP) slides 8.6%,  MDJM (NASDAQ:MDJH) -4.8%, real estate services company Leju Holdings (NYSE:LEJU) -1.1%, Xinyuan Real Estate (NYSE:XIN) slips 0.5%. The related-party acquisition, which was announced late Monday, "not only implies tight liquidity conditions for Shimao, but is also a corporate governance red flag," J.P. Morgan analysts reportedly said in their note. They pointed to the deal's higher than usual valuation, which suggests that Shimao Group "is essentially transferring the cash from property

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Chinese real estate stocks tumble after Shimao Group transaction