March 15 (Bloomberg) -- China’s property stocks extended declines after Premier Wen Jiabao said the country’s home prices are far from a reasonable level, denting hopes real estate curbs will be eased.
The Shanghai Composite Index’s measure of property shares dropped 2.5 percent at local closing, the largest decline among the five industry groups on the benchmark gauge. The property index had the biggest two-day drop since November 2010. China Vanke Co., the country’s biggest developer by sales, fell 1 percent to a three-week low in Shenzhen trading. Poly Real Estate Group Co. dropped 2.6 percent to the lowest since Feb. 17.
China must not slacken efforts in regulating the housing sector and relaxing curbs could cause “chaos” in the market, Wen said at a press conference in Beijing yesterday. A burst property bubble would hurt the entire economy, and the government wants “long-term steady and sound growth” in housing, he said.
“Hopes of a quick loosening are dashed,” wrote Alan Jin, a Hong Kong-based analyst at Mizuho Securities Asia Ltd., in a note to clients today. “It is unlikely for the central government to send out a clear loosening signal to the market any time soon.”
Chinese developers traded in Hong Kong also declined. China Resources Land Ltd., a state-owned developer, fell 1.6 percent to HK$13.54, the lowest since March 8. Country Garden Holdings Co. dropped the most in two weeks, losing 4.5 percent to HK$3.21.
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