Chinese equities posted the biggest drop in more than two weeks in New York, led by SouFun (SFUN) Holdings Ltd., on concern falling home prices will exacerbate a sixth quarter of slowing growth in Asia’s largest economy.
The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. retreated 1.1 percent to 92.13 yesterday, the steepest drop since Sept. 20. Real estate website SouFun sank the most in a month, while Huaneng Power International Inc. fell as coal prices increased. China Life Insurance Co. traded at a discount to its Hong Kong stock for the first time in a week. Airlines rallied as data showed passenger numbers increased during the holiday week.
New home prices in China rose 0.17 percent last month from August and dropped 1.4 percent from a year ago, according to a report released yesterday by SouFun, which tracks prices in 100 cities. The government is preparing for a leadership transition on Nov. 8 as the faltering U.S. recovery and European debt crisis sap global demand for exports. China’s economy expanded 7.6 percent in the second quarter, the slowest pace since 2009.
“The housing situation in China won’t become a crisis as has happened here, but it will negatively affect some companies,” Gustavo Galindo, who helps manage $8 billion in emerging market assets at Russell Investments in New York, said by phone yesterday. “Sentiment on China remains negative.”
The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., slid 1.1 percent to $34.99, the biggest one-day drop since Sept. 25. The Standard & Poor’s 500 Index (SPX) dipped 0.3 percent to 1,455.88 as European finance ministers met to discuss the region’s debt crisis.
Beijing-based SouFun slumped 5.8 percent to $18.10, the largest decline since Aug. 21. E-House China Holdings Ltd. (EJ), a property agency service provider based in Shanghai, slid 3.1 percent to $4.39, losing the most in a week.
September home prices in Beijing rose 0.16 percent from the prior month and those in Shanghai added 0.07 percent, according to SouFun’s statement yesterday. Property sales in China’s major cities fell in the first week of October, the so-called Golden Week holiday, dropping 70 percent in Beijing from the weekly average for October last year, and sliding 60 percent in Shanghai, SouFun said.
China’s October home sales may turn out to be weaker than expected, Credit Suisse Group AG analysts led by Du Jinsong wrote in a report yesterday.
“Home sales during Golden Week were slightly disappointing,” John-Paul Smith, Deutsche Bank AG’s emerging- market strategist, said by phone from London yesterday. “The big picture on the ground unfortunately continued to deteriorate.”
Huaneng Power International Inc. (600011), China’s largest electricity producer, plunged 3.9 percent to $29.43 in New York, the biggest loss since Sept. 14.
China’s benchmark power-station coal price rose for the first time in five weeks as coal with an energy value of 5,500 kilocalories a kilogram at the port of Qinhuangdao climbed to between 630 yuan ($100) and 640 yuan a metric ton as of Oct. 7, according to the China Coal Transport and Distribution Association yesterday.
October gaming revenue in Macau is likely to post zero to 5 percent growth from a year ago based on data for the first week, Cameron McKnight, an analyst at Well Fargo & Co., wrote in a report yesterday. That would be lower than the 5 percent rate estimated by analysts, he wrote.
China Life Drops
China Life, the country’s largest insurer, declined 2.2 percent to $43.51 in New York, the largest slump in a month. Its American depositary receipts, each representing 15 underlying shares, traded 0.1 percent below its Hong Kong stock, the first discount in eight days.
ADRs of China Southern Airlines Co., Asia’s biggest carrier by passenger numbers, jumped 3.9 percent to a two-month high of $23.85. China Eastern Airlines Corp. (670), the second-largest carrier in the country, climbed 1.2 percent to $16.28, the highest since Aug. 22.
The number of air passengers in China rose 27 percent during the Golden Week holiday, according to data from the nation’s Civil Aviation Administration.
China Southern carried 1.65 million passengers during the holiday, the company said in an e-mail statement yesterday.
The Shanghai Composite Index (SHCOMP) lost 0.6 percent to 2,074.42 in its first trading day after a week-long holiday, extending its slump this year to 5.7 percent. Companies in the Shanghai gauge traded at 11.3 times their earnings, the lowest level since at least 1997.
Haitong Securities Co. strategist Chen Ruiming, who correctly predicted on Aug. 1 the index would fall below the 2,000 level, says the measure is poised to drop a further 14 percent to 1,800 this year. China’s stocks will end down for a third year, according to Bank of Communications Co.’s Hao Hong, the only forecaster among 13 strategists surveyed by Bloomberg at the start of the year to predict declines for equities in 2012.
The Hang Seng China Enterprises Index of Chinese companies slid 1.3 percent to 9,839.84, falling the most in two weeks.
The Chinese yuan yesterday climbed to 6.2812 per dollar in Shanghai, the strongest level since China unified official and market exchange rates at the end of 1993, before ending the trading day 0.04 percent weaker at 6.2872, according to the China Foreign Exchange Trade System.
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