(Bloomberg) -- China Vanke Co. dropped to a record low after getting its first sell rating from Wall Street brokerages, as it grapples with deepening liquidity pressure and slumping profits.

The company’s Hong Kong-listed shares fell as much as 12%, weighing on overall sentiment in the property sector. A Bloomberg gauge of Chinese developer stocks was down as much as 2.1% after traders in the city returned from a holiday.

The Chinese builder “will undergo a challenging time of deleveraging and relying on banks and state-owned enterprises’ support,” JPMorgan Chase & Co. analysts including Karl Chan wrote in a note dated Monday. Vanke’s decision not to pay a dividend with last week’s results are among other reasons for investors to be worried, they added. 

The yearslong slump in China’s real estate sector that sparked several bankruptcies is starting to weigh on some larger developers that have managed to avoid default. Vanke — whose major shareholder is a state-owned firm in Shenzhen — has been seen as a bellwether for government support of major builders.

Other Chinese developers also traded lower. Agile Group Holdings Ltd. slumped as much as 13% after reporting a bigger-than-expected net loss in 2023, while KWG Group Holdings Ltd. slid as much as 14%. 

Read More: China Vanke Profit Tumbles 46%, Vows to Cut Debt By $14 Billion

JPMorgan downgraded Vanke’s onshore and offshore shares to underweight from neutral, while slashing its price targets on both by more than 25%. That’s the first sell-equivalent rating for the H-shares, though it’s the fifth for the A-shares, according to data compiled by Bloomberg.

There have been other signs of concerns among financial institutions, with the property firm’s credit ratings cut to junk level by Fitch Ratings Inc. and Moody’s Corp. last month.

While JPMorgan believes Vanke will avoid default due to strong support from authorities, “until more solid evidence of liquidity easing, we think the share prices will remain under pressure.” The Hong Kong-listed stock has tumbled 88% from its all-time high in 2018.

(Updates with share price movements in second and fifth paragraph)

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