The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. slid 1.8 percent to 94.35 yesterday. SouFun, China’s biggest real-estate information website, tumbled 8.9 percent, the steepest slump since 2011. Macau casino operator Melco Crown Entertainment Ltd. (MPEL) dropped after the city’s gambling revenue growth fell to the lowest since October 2012.
Bill Gross, who oversees the world’s largest bond fund at Pacific Investment Management Co., said in a Feb. 4 interview on Bloomberg Television that the pace of growth in the Asian nation is the biggest risk for global markets. About 66 percent of Chinese family assets were invested in real estate in 2013, according to a national survey of about 28,000 households.
China “needs to rebalance and reform the economy and preferably without a major blowup in its financial system,” Elena Ogram, a Zurich-based investor at Bank Bellevue AG, who oversees $50 million in emerging-market assets including Chinese stocks, said by e-mail yesterday. “If property prices begin to correct, how will that impact households’ ability to consume and the economy in general?”
The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., fell 1.3 percent to $33.71, the lowest price since July. The Standard & Poor’s 500 Index slipped 0.2 percent as a private report showing companies added fewer jobs than forecast overshadowed acceleration in service industries.
Beijing-based SouFun (SFUN) tumbled to $72.26, the biggest slump since Nov. 1, 2011. Trading volume on its American depositary receipts was 2.5 times the 90-day average compiled by Bloomberg. Xinyuan Real Estate Co. (XIN), another Beijing-based property developer, dropped 1.5 percent to $4.51, the lowest level since July. Its ADRs have dropped 16 percent this year, after rallying 49 percent in 2013.
Among Chinese urban households that own apartments, 75.5 percent of their assets are in real estate, according to Gan Li, director of the Survey and Research Center for China Household Finance in Chengdu, a body set up by the Southwestern University of Finance and Economics. The center’s 2013 national survey showed that households’ assets rose by 20 percent from 2011, while the value of their residential property holdings surged 26.8 percent.
New home prices in December had the biggest year-on-year gain in 2013, increasing 12 percent, according to data released by SouFun on Dec. 31.
Melco Crown’s ADRs retreated 1.7 percent to $38.98, boosting their weekly rout to 4.9 percent. Trading volume was triple the three-month average.
Macau casino revenue growth slowed to 7 percent from a year earlier to 28.7 billion patacas in January, according to data published on the website of the city’s Gaming Inspection and Coordination Bureau yesterday, the first time growth came in below 10 percent since January 2013.
About $3 trillion has been erased from global equities this year after losses that began with currencies in Turkey and Argentina spread to developed markets.
“Some emerging markets have troubles of their own making, but the economic slowdown in China makes it more difficult for those nations to resolve their problems, because they have to resolve them in a slower growth environment,” Bank Bellevue’s Ogram said.
The Hang Seng China Enterprises Index (HSCEI) in Hong Kong declined 0.4 percent to 9,470.62, also retreating 12 percent this year. Markets in Shanghai, which have been closed for the past four days for the lunar New Year holiday, will reopen tomorrow. The Shanghai Composite Index has slumped 3.9 percent so far this year.
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