China’s stocks rose for a fourth day on speculation Shanghai, the nation’s financial center, will relax property curbs to prevent slumping home prices from undermining the world’s second-biggest economy.
China Vanke Co. (000002) and Poly Real Estate Group Co. (600048) led a gauge of property companies to its highest level in three months after the Shanghai Securities News reported the city eased some home purchase restrictions. Industrial & Commercial Bank of China Ltd. and Bank of China Ltd. slid after the same paper said lending by the four biggest banks may be down from January. China’s manufacturing may shrink for a fourth month in February, a survey of purchasing managers indicated.
The Shanghai Composite Index (SHCOMP) climbed 22.16 points, or 0.9 percent, to 2,403.59 at the end of trading, the highest close since Nov. 29. The CSI 300 Index (SHSZ300) rose 1.4 percent to 2,597.48. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, retreated 2 percent yesterday in New York.
“We will see policy easing and improvement in liquidity throughout February,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “What we need to closely watch out for is coming economic data to verify the market expectations about an improvement in the economy.”
The Shanghai Composite has rebounded 9.3 percent this year on expectations the government will ease monetary policies to bolster economic growth that cooled to the slowest pace in 2 1/2 years in the fourth quarter of 2011. The measure trades at 9.9 times estimated earnings, compared with a record low of 8.9 times on Jan. 6, according to weekly data compiled by Bloomberg.
A gauge of property companies in the Shanghai Composite surged 2.8 percent, the highest close since Nov. 2. Vanke, the nation’s biggest listed property developer, gained 3.4 percent to 8.19 yuan. Poly Real Estate, the second biggest, advanced 2.7 percent to 11.28 yuan. Gemdale Corp. gained 3.9 percent to 5.65 yuan.
Non-local residents in Shanghai are now qualified to buy second homes once they have held residence permits for 3 years, the Shanghai Securities News reported today, citing the city’s housing regulator. Residence permit holders previously were not allowed to buy second homes in Shanghai, the newspaper said, citing a Feb. 1, 2011 announcement. The easing of curbs aims to benefit the real estate market, it said, without citing anyone. Securities News is operated by the Xinhua News Agency.
Falling Home Prices
“This is certainly a measure of easing,” said Jack Gong, a Hong Kong-based analyst at Jefferies Group Inc. “But the easing by the local government doesn’t mean the central government will loosen its property controls.”
None of the 70 cities monitored by the government posted gains last month as Premier Wen Jiabao reiterated his determination to maintain property curbs. New home prices in Shanghai, Beijing, Shenzhen and Guangzhou declined for a fourth month, the National Statistics Bureau said in a statement on its website on Feb. 18.
Falling home prices fueled an attempt by China’s smaller cities to release tightening on property policies. The eastern city of Wuhu was the first Chinese city this year to ease measures ordered by the central government by waiving a deed tax and subsidizing some home purchases. The move was suspended three days later, following the outcome of a similar attempt in October by Foshan in southern China.
China’s manufacturing may shrink for a fourth month in February as Europe’s sovereign-debt crisis damps exports and the housing market cools. The preliminary 49.7 reading of the PMI index compares with a final 48.8 in January. January and February economic data are distorted by a weeklong Chinese holiday.
“With a meaningful rebound of domestic demand not in sight, external weakness is starting to bite, adding more downside risks to growth,” Qu Hongbin, a Hong Kong-based economist for HSBC, said in today’s statement.
ICBC, the biggest lender, fell 0.5 percent to 4.44 yuan. Bank of China dropped 0.7 percent to 3.06 yuan.
China’s four biggest banks lent a combined 70 billion yuan ($11.1 billion) in the first three weeks of February, Shanghai Securities News reported, citing an unidentified person familiar with the matter. February lending by the four banks may be lower than January, the newspaper cited a China International Capital Corp. report as saying. New lending was 738.1 billion yuan last month.
--Zhang Shidong. Editors: Allen Wan, Richard Frost
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