Shares in Hong Kong’s New World Development fall after Reuters estimated a loss of $2.6 billion

By Clare Jim

HONG KONG (Reuters) – Shares in New World Development, a major Hong Kong property developer, fell 14 percent after it forecast a net loss of up to HK$20 billion ($2.6 billion) for the year financial ended in June.

Shares fell to $6.74 in early trading, marking a new 21-year low.

The company said in a filing on Friday that it expects core operating profit from continuing operations to fall as much as 23% due to the lack of revenue and that it would have fair value and impairment losses of up to 9.5 billions of HK dollars.

“Together with the continued interest rate increases experienced during the year, as well as depreciation, the group expects to record a (net) loss,” the statement said.

In a separate statement on Friday, the company said the provisions were one-off, non-cash and unrealized items and did not affect group cash flow.

New World has one of the highest debt-to-equity ratios among property developers in Hong Kong and its deleveraging plan has been closely watched by investors over the past year.

While Hong Kong has not seen major debt defaults by property developers like in mainland China, investors have been concerned about weakening liquidity for the sector due to sluggish residential and commercial property markets.

($1 = 7.7971 Hong Kong dollars)