China Developers Decline as Shanghai Restates Curbs
(Corrects story published on Feb. 29 to remove reference to green card in second paragraph.)
The statement was issued a week after a newspaper affiliated with state-run Xinhua news agency said Shanghai had tweaked its definition of locals to allow the city’s residence permit holders to buy second homes after three years.
The clarification means 671,000 in the city of 20 million who were issued residence permits as of March 2009 would be excluded from the pool of second-home buyers, China Business News reported. Shanghai will “strictly” implement the home- purchase restrictions, according to a statement on the website of the city’s housing authority late yesterday.
“Shanghai’s policy was halted because it has become a hot topic,” Eric Zhang, a Beijing-based analyst at China International Capital Corp., the country’s biggest investment bank, wrote in a note. “The central government has big concerns over the economy this year, so they only will call off major easing. Only quiet policy fine-tuning may be accepted.”
The property gauge on the Shanghai Composite Index (SHCOMP) lost 3 percent at the close, the most since Nov. 30 and biggest decline among five industry groups on the benchmark measure. China Vanke Co. (000002), the biggest listed developer on mainland exchanges, slid 2.8 percent to 8.28 yuan in Shenzhen trading, while Poly Real Estate Group Co., the second largest, fell 3.3 percent to 11.1 yuan in Shanghai.
Property Stocks Decline
Chinese developers traded in Hong Kong also retreated. China Overseas Land & Investment Ltd. (688), the biggest of the nation’s developer listed in the city, slipped 2.5 percent to HK$16.26, while Country Garden Holdings Ltd. dropped by 4.1 percent to HK$3.51. Developers made up four of the 10 biggest decliners on the MSCI China Index (MXCN) tracking mainland companies traded in Hong Kong.
Local governments have attempted to ease property tightening policies even after Premier Wen Jiabao restated his stand this year that China won’t waver on its real estate controls and efforts to bring prices down to a reasonable level.
The eastern Chinese city of Wuhu on Feb. 13 reversed its decision to relax property curbs. The mid-sized city in Anhui province had planned to waive a deed tax and subsidize some purchases on Feb. 9, becoming the first Chinese city this year to signal its intention to ease property measures. In October, the southern Chinese city of Foshan also shelved plans to ease limits on home purchases one day after its announcement.
--Bonnie Cao. Editors: Linus Chua, Andreea Papuc
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