The collapse of real estate stocks in China with renewed debt concerns.. What happened?

Chinese real estate stocks fell on Monday, led by Country Garden shares, which fell to an eight-month low as concerns over Chinese real estate developers’ debt renewed.

Shares of the Hong Kong-listed company fell about 7%, the lowest since early November. Country Garden Services fell more than 15%.

JPMorgan has undervalued both companies and cut Country Garden and its real estate services subsidiary’s price target by more than half.

Hang Seng’s main real estate index, a measure of Chinese real estate companies listed in Hong Kong, fell more than 5%, compared with a 1.5% drop in the Hang Seng index.

Longfor Group shares fell 9% on Monday, while Sunac shares fell about 6%, China Vanke fell 3.4% and China Overseas Land and Investment fell 3.16%.

Country Garden is one of the continent’s largest real estate developers. Reuters reported that last week’s move to refinance part of the 2019 loan failed to reassure investors of its ability to service its debt.

JPMorgan analysts cut the price target for “Country Garden” by more than 60% to HK $0.90 and for “Country Garden Services” by about 70% to HK $6.70.

China’s real estate sector slumped on Monday after steep losses last week on the back of weak real estate data and a late earnings report from real estate giant Evergrande that showed the full extent of default.

Years of massive growth also led to the construction of ghost towns, where supply outstripped demand as developers looked to take advantage of the appetite for home ownership and real estate investment.

Official data from last week showed a 7.9% drop in real estate investment from January to June. This is more severe than the 7.2% decline recorded from January to May.