(Bloomberg) -- Hong Kong developer New World Development Co.’s shares dropped as much as 7.9% to the lowest level since November 2003 after the company reported a weak full-year result last Friday.

The decline leads other peers in Hong Kong, with Henderson Land Development Co. down as much as 6.4% and Sun Hung Kai Properties Ltd. falling by 4.5%. 

The company announced last week that it would cut its final dividend to 30 Hong Kong cents from HK$1.5 last year. The firm also saw its interest expense double during the period, further adding concerns over its financial situation as the city’s most indebted major builder.

The firm’s “sizable dividend cut” is a key reason dragging on shares today, raising concerns among investors that other developers may also cut dividend, said Patrick Wong, analyst at Bloomberg Intelligence.

UOB-Kay Hian Holdings Ltd. downgraded the company to hold to factor in the slower-than-expected sales progress and the lower profit margin for the properties business in Hong Kong. CLSA Ltd. also downgraded New World to sell due to the dividend cut.

Hong Kong developers are facing a challenging market, as rising interest rates have dimmed buyer appetite. The Centa-City Leading Index, an indicator of secondary private residential property prices in Hong Kong, fell for a seventh week between Sept. 18-24 to the lowest since January, according to data compiled by Bloomberg.

Home prices in the city could tank 10% in the next 12 months, Bloomberg analysts Patrick Wong and Yan Chi Wong estimated in a Sept. 27 note. 


--With assistance from John Cheng and Charlotte Yang.

(Adds comment from BI in fourth paragraph and CLSA’s downgrade in the following paragraph)

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