China’s stocks fell, with the benchmark index dropping the most in two weeks, on signs the global recovery is slowing and as investors speculated the government will introduce a property tax.
Jiangxi Copper Co. and China Shenhua Energy Co. paced declines by raw-material producers as commodity prices slid. China Southern Airlines Co. lost 3.9 percent on concern shrinking trade will curb demand for air travel. China Vanke Co., the country’s biggest listed property developer, dropped the most in three months after the Xinhua News Agency reported the government is studying a property tax.
“China’s economy is facing great downward pressure because of weaker demand at home and abroad,” said Zhang Ling, a fund manager at Shanghai River Fund Management Co. “Stocks probably have yet to fully price in this scenario and investors should use that as an excuse to take profits.”
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, lost 53.73, or 2 percent, to close at 2,596.58, the biggest decline since Aug. 10. The CSI 300 Index slumped 2.4 percent to 2,843.02.
The Shanghai gauge has rebounded 9.8 percent from this year’s low on July 5 as investors speculated the government would ease restrictions on real estate and allow more lending to counter a weaker economy. That’s pared this year’s loss to 21 percent, after the government increased down-payment requirements on home sales and ordered banks to set aside more deposits as reserves.
U.S., Japan Data
The Standard & Poor’s 500 Index yesterday tumbled 1.5 percent to the lowest in seven weeks. Purchases of U.S. existing houses plunged by a record 27 percent in July to a 3.83 million annual pace, the lowest in a decade of record keeping and worse than the most pessimistic forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed. The U.S. accounts for about 20 percent of China’s exports.
Japan’s overseas shipments advanced 23.5 percent in July from a year earlier, less than June’s 27.7 percent, the Finance Ministry said today in Tokyo.
“Uncertainty over the strength of the global economy will add to concerns among local investors about China’s growth,” said Sun Chao, an analyst at Citic Securities Co. in Shanghai.
Slowing China growth would curb demand for commodities. The country is the world’s biggest consumer of raw materials such as coal and steel. Jiangxi Copper, China’s biggest producer of the metal, fell 1.2 percent to 28.49 yuan. Shenhua, the nation’s biggest coal producer, retreated 2.9 percent to 23.79 yuan. Aluminum Corp. of China Ltd., the listed unit of nation’s biggest maker of the lightweight metal and also called Chalco, dropped 2.6 percent to 10 yuan.
The London Metal Exchange Index of six metals including copper and zinc lost 1.6 percent yesterday, the lowest since July 27. Crude oil for October delivery dropped 2 percent to $71.63 a barrel, the lowest settlement since June 7, in New York.
China Southern, the nation’s biggest carrier by fleet size, dropped 3.9 percent to 7.11 yuan. China Eastern Airlines Corp., the second largest, retreated 3.2 percent to 7.31 yuan.
Air China Ltd. slid 2.2 percent to 11.39 yuan. A Henan Airlines flight crashed late yesterday in the northeastern province of Heilongjiang, killing at least 42 people on board. Air China controls Shenzhen Airlines, which in turn owns Henan Air, according to Huang Bin, a spokesman for Air China.
Vanke led declines for developers, falling 4 percent to 8.50 yuan, its biggest drop since May 17. Poly Real Estate Group Co., China’s second-largest developer by market value, retreated 3.6 percent to 12.14 yuan. Gemdale Corp., the fourth largest, dropped 3.4 percent to 6.56 yuan.
China is still studying property tax and plans to introduce real estate tax reform, Xinhua reported yesterday citing Xu Lin, director of the finance department at the National Development and Reform Commission. Xu did not say when the tax may take place, the report said.
A gauge of property stocks slid 2.9 percent today, capping a 25 percent tumble this year, after the government raised down payments and mortgage rates for multiple-home buyers and ordered lenders to halt third-home loans in areas with “excessive” price gains.
China’s August new loan growth may slow to about 500 billion yuan ($73.5 billion), Securities Daily reported today, citing several analysts at domestic brokerages. New lending was 532.8 billion yuan a month earlier, according to the central bank.
Sany Heavy Industry Co. and SAIC Motor Corp. retreated among machinery and auto makers after rallying at least 29 percent in the second half of the year.
Sany Heavy, China’s biggest maker of machinery for handling concrete, slid 3.3 percent to 25.20 yuan, after gaining 43 percent since the end of June through yesterday. SAIC Motor, the nation’s largest carmaker, lost 2.6 percent to 15.61 yuan.
Investors opened 262,763 accounts to trade Chinese stocks during the week ended Aug. 20, up 3.8 percent from a week earlier, the China Securities Depository and Clearing Corp. said on its website yesterday.