Chinese property developers investing in new ventures outside their core business are hurting the market value of their bonds.

The notes of Sunac China Holdings Ltd and Dalian Wanda Commercial Properties Co may come under more pressure this year as the groups branch out into non-core businesses. Purchases by highly leveraged Chinese developers unrelated to real estate raise the "knee-jerk question" of whether they might be having problems with their existing business, said Bryan Collins, a fixed-income portfolio manager at Fidelity International.

Chinese builders face increased competition and tighter profit margins. Moody's Investors Service Inc expects government measures to slow sales growth in the property market this year after hitting a record high in 2016.

"Whenever a company goes outside its core business, it invites questions about its strategic focus and how its credit profile will evolve over time," said Clement Chong, a senior credit analyst in Singapore at NN Investment Partners.

Sunac's 2019 notes fell the most since August after it announced its first investment outside of real estate on Jan 13. Wanda's 2018 and 2024 bonds fell when billionaire shareholder Wang Jianlin said last year the parent is planning five substantial acquisitions to focus more on entertainment and sports.