CityDev braces for more losses after painful Friday selloff

Due to its removal from key index.

City Developments Limited is due for more losses after sustaining heavy losses on Friday, according to a report by Barclays.

CityDev suffered a 4.1% share price decline on Friday after news broke of of its imminent deletion from the FTSE EPRA/NAREIT Global Developed Index.

The removal was revealed late Thursday, following a quarterly review for the FTSE EPRA/NAREIT Global Real Estate Index, Asia region.

“CityDev was not aware of the reason for its deletion from the index. We believe [the deletion] could be due to its relative lower liquidity (flat market cap, tepid volumes YTD) compared to regional counterparts as Hong Kong’s Hang Seng Properties Index’s 22% gain YTD and SCP’s 10% market cap gain year-to-date,” said Barclays.

CityDev will be replaced by Australia-listed Shopping Centres Australasia Property Group (SCP) starting Monday, June 22.

The report warned that CityDev will suffer further losses until its actual deletion on June 22 due to rebalancing by passive funds.

“We expect the share price could remain weak until the day of deletion. We estimate outflows of cUS$110mn which is c.11 days of Average Daily Volume (ADV),” said the report.