China Vanke, the largest listed real estate developer in China, plans to issue $1.6 billion worth of new stock to raise money for residential projects, the company told the Shenzhen stock exchange on Thursday.

Vanke said it planned to use the 11.2 billion yuan in new capital to finance development in cities throughout China, notably in Tianjin, the port city near Beijing, as well as along the urban corridors of the Yangtze River and Pearl River Delta. The issue still must be approved by shareholders.

While the timing of the issue has not yet been determined, the timing of the announcement was not ideal.

The Chinese financial regulator said late last month that it would tighten rules on lending after the Shanghai Composite Index surged 90 percent this year. The agency urged banks to ensure that loans go to finance real projects, rather than speculation in the stock market.

The Shanghai Composite has fallen more than 15 percent since its peak early this month, and is struggling to stabilize, although it is still up more than 60 percent for the year.

The Vanke announcement shook up Chinese markets, with the Shenzhen Component index falling 3 percent at midday, but recovering to 11,897.74, or 0.81 percent down at the close. The Shanghai index saw a 1.2 percent dip Thursday, before it rose again to just 0.71 under the day before.

Vanke shares opened down 2.7 percent before inching back up to 9.49 yuan, or 2.47 percent down at the close.

The company’s sales increased 32 percent for the first seven months of the year, lifted by a larger trend. The value of real estate sales in China rose by 60 percent in the first seven months of the year compared with a year earlier, the government’s statistics bureau said this month, with home prices rising every month of the first half, up 0.9 percent in June alone. About 1.8 trillion yuan was invested in Chinese real estate in the year to July, the bureau said.

But Zhang Jianguo, president of China Construction Bank, warned of an asset bubble this month, and the lender, one of the largest in China, has said it will reduce new loans by 70 percent in the second half, despite Beijing’s commitment to a moderately loose monetary policy.

Chinese cities are growing fast, and the government is encouraging development as part of its 4 trillion yuan stimulus package. About 600 million, or 46 percent, of China’s 1.3 billion people now live in cities, an official from the Ministry of Housing and Urban-Rural Development told China Daily in an article published Thursday, and the urban population’s share is expected to grow by 1 percent per year for the next 15 to 20 years.

The Vanke issue, approved by its board, now needs the approval of shareholders and the China Securities Regulatory Commission.

Vanke is based in Shenzhen, Guangdong Province, and was one of the first companies to list on the city’s exchange.

Editor:Xie Fang