China’s Stocks Decline to Lowest in Month on Property
China’s stocks fell, dragging the benchmark index to a one-month low, on speculation the government will announce property curbs during a legislative meeting next week and after money-market rates jumped.
Guangzhou Pearl River Industrial Development Co. slumped 4 percent after the Shanghai Securities News reported the city of Guangzhou plans to announce housing restrictions. Jiangxi Copper Co. (600362) and Yanzhou Coal Mining Co. led declines for metal and coal producers after the China Securities Journal said in a commentary the government may tighten monetary policy because of excessive market liquidity and rising property prices. The seven-day repurchase rate jumped the most in two months.
The Shanghai Composite Index (SHCOMP) slumped 1.4 percent to 2,293.34 at the close, the lowest level since Jan. 25. The measure rose as much as 0.6 percent earlier. The 30-day volatility for the index jumped to the highest level since Jan. 28. The CSI 300 Index (SHSZ300) slid 1.4 percent to 2,567.59. The Hang Seng China Enterprises Index (HSCEI) lost 1.9 percent in Hong Kong.
“There’s too much uncertainty before the National People’s Congress,” said Xu Shengjun, an analyst at Jianghai Securities Co. in Shanghai. “People are worried there will be even more tightening measures for the property sector.”
The Shanghai Composite has fallen 5.8 percent after gaining as much as 24 percent during a bull-market rally that started on Dec. 3. Its valuation of 9.5 times projected 12-month earnings is the lowest since Dec. 26. The index is still up 1.1 percent this year. Trading volumes were 9.5 percent lower than the 30- day average, data compiled by Bloomberg show.
The National People’s Congress will start on March 5 and the Chinese People’s Political Consultative Conference on March 3. The China Securities Journal reported yesterday some property measures will likely be announced before the meetings.
A gauge of property stocks in the Shanghai index plunged 2.4 percent, the most among five industry groups. Guangzhou Pearl River, a residential real-estate developer, lost 4 percent to 12.10 yuan, the lowest since Dec. 25. China Vanke Co. the biggest developer, declined 1.7 percent to 10.82 yuan.
The Shanghai Securities News also reported Beijing has completed a draft of property-control measures. Premier Wen Jiabao called for home-purchase restrictions in cities with “excessively fast” price gains last week, as a Feb. 22 government report showed new home prices climbed in January in 53 of the 70 cities that are tracked, compared with the previous month’s 54, which was the most since April 2011.
The central bank conducted 5 billion yuan of 28-day repo operations today, according to a trader at a primary dealer required to bid at auctions. The seven-day repo rate rose 53 baiss points to 3.82, the most since Dec. 25, as the central bank drained cash throgh market operations.
Jiangxi Copper, China’s biggest producer of the metal, sank 2.6 percent to 23.54 yuan. Aluminum Corp. of China Ltd., the listed unit of the nation’s biggest maker of the lightweight metal, fell 3 percent to 4.82 yuan. Yanzhou Coal (600188), China’s fourth-biggest producer, lost 3.4 percent to 17.18 yuan.
“What’s adding fuel to fire is bad earnings,” said Xu. “Earnings that have been reported are worse than expected. If we get any unexpected negative news at the congress, stocks may even fall below 2,000.”
Ping An Bank Co. is scheduled to release earnings next week, while Ping An Insurance Group Co. and China Coal Energy Co. will report the following week.
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