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China's Stocks Decline Most in 2 Weeks on Concern About New Property Curbs
China’s stocks fell the most in two weeks as rising property prices boosted concern the government will deepen measures to curb speculation and reports of a probe into rubber futures fuelled a selloff in commodity prices.
China Vanke Co. and Industrial & Commercial Bank of China Ltd. paced declines for developers and banks as Jones Lang LaSalle Inc. said the government may further tighten anti- speculation measures. Jiangxi Copper Co. dropped the most in three weeks as metal prices slid after the Securities Times reported that regulators were investigating large positions in natural rubber futures. China Shenhua Energy Co. slid 2.1 percent as domestic coal prices fell the most in five months.
“It remains a big possibility that new tightening measures in the property market will come out as the pickup in prices is a bad sign for the government,” said Zhang Kun, a strategist at Guotai Junan Securities Co. in Shanghai.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, dropped 38.94, or 1.4 percent, to 2,656.35 at the 3 p.m. close, the biggest decline since Aug. 25. The CSI 300 Index fell 1.8 percent to 2,926.46. The market’s losses accelerated in the afternoon on speculation inflation may have exceeded economists’ estimates in August, spurring concern about higher interest rates. The data will be released Sept. 11.
The Shanghai measure plunged 27 percent in the first half of the year as the government increased down-payment requirements on home sales and ordered banks to set aside more deposits as reserves to curb surging property prices. The gauge has rebounded 12 percent from this year’s low on July 5, paring this year’s loss to 19 percent, as investors speculated the government would ease lending curbs to spur growth.
Property Stocks
A gauge of property stocks fell 2.4 percent for the steepest decline in the Shanghai Composite, adding to the 27 percent drop this year. The 21st Century Business Herald reported yesterday China may introduce a second-round of measures to curb the property market, including stopping loans to real estate developers and compulsory lowering of home prices.
Vanke, the nation’s biggest listed property developer, dropped 3.4 percent to 8.28 yuan. Poly Real Estate Group Co., the second largest, fell 4.1 percent to 11.32 yuan. ICBC, the nation’s biggest listed lender, slipped 0.7 percent to 4.06 yuan. China Construction Bank Corp., the second largest, lost 0.6 percent to 4.65 yuan.
The government is determined to see a decline in the nation’s residential property prices and may increase mortgage rates and cash down payments for home purchases if residential prices don’t decline, said Colin Dyer, Chief Executive Officer with Jones Lang LaSalle Inc. Soufun data show a 12.3 percent monthly appreciation for Beijing homes in August and gains of almost 7 percent in Shenzhen and 6.6 percent in Guangzhou.
Trade Frictions
The recent increase in property prices and transaction volumes is a short-term fluctuation, the Shanghai Securities News reported, citing central bank adviser Xia Bin. The nation’s tightening policies for real estate, local government financing vehicles and its promotion of energy savings won’t change in the second half, Xia was cited as saying.
The customs office may tomorrow say China’s trade surplus topped $20 billion for a third month in August in a report, risking American lawmakers’ calls for protection from imports.
Exports probably exceeded imports by $26.9 billion, compared with $15.7 billion in the same month a year earlier, according to the median of 34 forecasts in a Bloomberg News survey. Shipments abroad gained 35 percent and imports grew 27.5 percent, according to the survey.
“The greatest risk to the global economy in the coming years is U.S.-China trade friction,” Donald Straszheim, director of China research at International Strategy & Investment, said in a note to clients.
Commodity Declines
Other Chinese data due on Sept. 11 may show industrial- output growth weakened in August, while inflation accelerated to 3.5 percent, the fastest pace in almost two years, partly because of rising food costs. The inflation rate may have risen to 3.7 percent in August, UBS AG said Sept. 2.
China, which hasn’t raised interest rates since 2007, may start increasing borrowing costs from the fourth quarter because of accelerating inflation, large wage increases and “loose” liquidity conditions, RBC Capital Markets said after the release of July inflation data on Aug. 11.
Commodity prices in China declined today on market rumors that regulators were investigating large positions in natural rubber futures, the Securities Times said on its website, citing people it didn’t identify. Rubber prices dropped in Shanghai and the declines spilled over into other commodities including copper, aluminum and zinc, it said.
Coal Drops
Jiangxi Copper, China’s biggest producer of the metal, dropped 1.7 percent to 33.81 yuan, the most since Aug. 20. Aluminum Corp. of China Ltd., the listed unit of nation’s biggest maker of the lightweight metal, slid 3.8 percent to 10.29 yuan. Zhuzhou Smelter Group Co., China’s biggest producer of refined zinc, retreated 3.4 percent to 11.26 yuan.
Shenhua, the nation’s largest coal producer, slid 2.1 percent to 23.72 yuan. Datong Coal Industry Co., the third largest, retreated 1.9 percent to 16.41 yuan. Yanzhou Coal Mining Co., the listed unit of China’s fourth-biggest coal miner, lost 2.4 percent to 18.52 yuan.
The price of coal dropped 1.4 percent to 710 yuan to 720 yuan a metric ton from a week earlier, data from the China Coal Transport and Distribution Association showed.
Drugmakers Gain
Chinese drugmakers rose after Xinhua News reported deaths in China’s central Henan province from tick-borne disease and a Health Ministry alert against a drug-resistant bacteria.
Shandong Lukang Pharmaceutical Co., a Chinese antibiotic maker, jumped by the 10 percent daily limit to 10.18 yuan. A measure of healthcare-related stocks was the only gainer among the 10 industry groups on the CSI 300.
“The tick deaths certainly provided a trigger for today’s gains in healthcare stocks, which may benefit from increased demand,” said Liu Bin, an analyst at Guoyuan Securities Co. in Shanghai.
--Zhang Shidong. Editors: Allen Wan, Richard Frost
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at +86-21-6104-7014 or szhang5@bloomberg.net
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