Shares in many of China’s largest listed property developers have fallen more than 50% from their highs of last year in the face of investor fears that some developers might be forced into bankruptcy. Financial Times

After a couple of years of rapid investment, Chinese developers have been caught between two forces – government efforts to slow economic growth and the global credit crunch. The authorities have taken unusually strong measures to limit credit growth and have promised to introduce a tough new policy to reduce developers’ holdings of unused land.

Planned share listings have had to be shelved, but the most worrying signals have come from the debt market. According to BNP Paribas, both China Agile Property and Greentown China have seen the spreads on credit default swaps (which allow investors to buy insurance against default) more than double since October to more than 1,000 basis points this month, indicating a high level of investor uncertainty.

Partly as a result of these measures, the volume of property transactions has fallen sharply since November and, in the two main cities in southern China,

Shenzhen and Guangzhou, prices have also slumped.