China Stock Futures Fall on U.S. Debt Impasse; Vanke May Drop

China’s stock futures fell, signaling the benchmark index may drop, as wrangling between U.S. lawmakers over plans to raise the country’s debt limit fueled concerns that global economic growth will falter.

China Vanke Co. may pace losses by developers after Shanghai Securities News said China may publish a new list of cities that will be required to limit home purchases. CSR Corp., which made one of two trains involved in a fatal crash on July 23, may extend its biggest drop in almost three years. Anhui Conch Cement Co. may advance after Xinhua News Agency said China may meet a target of starting work on 10 million affordable housing units by November.

Futures on the CSI 300 Index expiring in August, the most active contract, lost 0.7 percent to 2,959.4 as of 9:28 a.m. local time. The Shanghai Composite Index added 0.5 percent to 2,703.03 yesterday. The CSI 300 Index rose 0.3 percent to 2,977.77.

“The U.S. debt impasse is more of a concern for the investors than the train crash,” said Wu Kan, a fund manager at Dazhong Insurance Co., which oversees $285 million. “Tight liquidity is restraining the stock market.”

The Shanghai Composite has slumped 3.7 percent this year as the People’s Bank of China raised interest rates three times and ordered lenders to set aside more cash as deposit reserves six times to contain inflation, which quickened to the fastest pace in three years.

Property Stocks

Investors have been focused this week on whether U.S. lawmakers can agree on a plan raising the nation’s debt limit before an Aug. 2 deadline when the country could default on some of its obligations. A House of Representatives vote scheduled for later today has been called off.

Chinese property stocks may move. The government may publish a new list of cities that will be required to limit home purchases by families in two months, the Shanghai Securities News reported. The eastern Chinese cities of Kunshan, Jiaxing, Changshu and Yangzhou and the southern city of Zhuhai are likely to be on the list, the newspaper reported.

The State Council this month said second and third-tier cities that have seen excessive price gains should restrict the number of homes each family is allowed to buy, according to the newspaper.

China’s central bank probably won’t increase banks’ reserve requirement ratios in July or August, as cash flows from abroad and money supply slowed, China Securities Journal said today in a commentary on its front page.

Central Bank Bills

Monthly maturing central bank bills in the second half of the year will average 227 billion yuan ($35 billion), compared with an average of more than 600 billion yuan in the first half, reducing pressure on the central bank to absorb cash from the financial system, according to the commentary written by Ge Chunhui, a reporter at the newspaper.

China has limited room to increase reserve requirement ratios as fewer central bank bills will mature in the second half, the Financial News reported today, citing experts it didn’t identify. China may raise interest rates at least once by the end of the year and the increase may be “small,” the newspaper reported.

Building-related stocks may be active. China may meet the target of starting work on 10 million affordable housing units by November, Xinhua reported yesterday, citing Vice Housing Minister Qi Ji. More than half of the 10 million affordable homes started construction by the end of June, the report cited Qi as saying.

CSR, China’s largest train maker, has lost 12 percent since the rail crash on July 23. In the rail disaster, a bullet train that had broken down after being struck by lightning was rear- ended by another locomotive. The crash killed at least 39 people and prompted the government to order a two-month inspection of rail safety.

To contact the reporter on this story: Irene Shen in Shanghai at ishen4@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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