Chinese stocks fell for a second day, led by real estate companies and commodity producers, amid concern increasing home prices will limit room for the government to spur economic growth.
A gauge tracking developers slid 1.7 percent. House prices in Beijing, Shanghai and Guangzhou rose the most since at least January 2011 last month from a year earlier, official data showed. The government may expand a tax on property purchases, Xinhua News Agency said yesterday. Yunnan Tin Co. (000960) and Jiangxi Copper Co. retreated more than 2.5 percent. The International Monetary Fund said risks are increasing that China’s growth this year will fall short of the lender’s forecast.
The Shanghai Composite Index (SHCOMP) dropped 1.1 percent to 2,023.40 at the close, extending yesterday’s 1 percent loss. The CSI 300 Index declined 1.6 percent to 2,245.33. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong added 0.2 percent.
“The fact that home prices are still rising will prevent the government from loosening policies,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Property is a big constraint on economic policies.”
Trading volumes in the Shanghai Composite were 2.1 percent lower than the 30-day average today. Thirty-day volatility was at 26.7, after yesterday reaching its highest level since December 2010, according to data compiled by Bloomberg.
Home prices climbed in 69 of the 70 cities the government tracked last month from a year earlier, the National Bureau of Statistics said today, matching the data in May. The southern business city of Guangzhou posted the biggest increase with a 16 percent advance. Prices climbed 13 percent in Beijing and 12 percent in Shanghai. All three cities had their biggest gains since government data began in January 2011.
China Vanke Co. (000002), the nation’s biggest listed property developer, lost 2.6 percent to 10.12 yuan. Poly Real Estate Group Co., the second largest, sank 2.1 percent to 10.78 yuan. Gemdale Corp., the fourth biggest, retreated 3 percent to 6.91 yuan.
“Downside risks” to the IMF’s 7.75 percent growth estimate have risen after a gauge of manufacturing weakened in June, the Washington-based fund said yesterday in its annual assessment of China’s economy.
“The growth outlook is clouded by mounting domestic vulnerabilities in the financial, fiscal and real estate sectors,” the IMF’s Executive Board said in a statement.
China’s richest man Zong Qinghou said the nation’s growth will slide further in the second half of the year and proposed cutting taxes and breaking up monopolies to drive an economic recovery.
Gauges (SHSZ300) tracking material and energy producers dropped at least 1.5 percent on the CSI 300. Yunnan Tin, the world’s largest producer of the metal, slid 2.6 percent to 11.80 yuan. Jiangxi Copper slumped 2.8 percent to 16.14 yuan, taking its loss for this year to 32 percent.
Datong Coal Industry Co. (601001), China’s third-largest coal company by capacity, slumped 4 percent to 6 yuan. Yanzhou Coal Mining Co., the fourth biggest, fell 3.8 percent to 9.73 yuan.
The Bohai-Rim steam coal price index, which tracks power-station coal prices at six Chinese ports, fell 1.5 percent in the week to yesterday, according to the Qinhuangdao Seaborne Coal Market’s website.
The Shanghai Composite has fallen 11 percent this year as data from industrial production to exports pointed to a slowdown in the economy and as money-market rates reached record highs last month. The measure trades at 8.3 times 12-month projected profit after valuations fell in June to the lowest level in at least five years, according to data compiled by Bloomberg.
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at email@example.com