China’s Stocks Drop to 2013 Low on Bird Flu, Property Concerns
China Vanke Co. and Poly Real Estate Group Co., the nation’s biggest developers, slumped at least 2 percent after Beijing increased the minimum downpayment on purchases of second homes. Air China Ltd. (601111) and China Southern Airlines Co. paced declines for carriers on speculation flu deaths may deter people from traveling. Shijiazhuang Yiling Pharmaceutical Co., whose drugs the government said may combat the virus, jumped 10 percent, leading gains for health-care stocks.
The Shanghai Composite Index (SHCOMP) slid 0.6 percent to 2,211.59 at the close, the lowest level since Dec. 27. The CSI 300 Index fell 0.5 percent to 2,472.30. The Hang Seng China Enterprise Index added 0.5 percent after plunging 3.1 percent on April 5. Mainland markets were shut April 4 and 5 for the Tomb-sweeping day holiday.
“There are worries about the bird flu that haven’t been reflected in the markets because we were closed for the holidays,” said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu. “There’s no real big driver to push stocks much higher in the near term.”
The Shanghai index has slumped 9.2 percent from a Feb. 6 high amid concern steps to cool property prices will drag on economic growth and as company earnings trailed estimates. Valuations on the gauge have sank to 9.1 times projected 12- month earnings, the lowest level since Dec. 13 and less than the seven-year average of 15.8, data compiled by Bloomberg show.
The Shanghai gauge’s trading volume was 20 percent lower than the 30-day average today, while its 100-day volatility was near the one-year high of 20 set on March 28, according to data compiled by Bloomberg.
Air China, the largest international carrier, lost 3.4 percent to 5.15 yuan. China Southern Airlines, the biggest domestic carrier, dropped 2.6 percent to 3.44 yuan.
China reported three more cases of the deadly H7N9 strain, bringing the total number of infections to 21. The virus has already killed six people. The uncertainty of the flu may drag on the market, Citigroup Inc. analysts Minggao Shen and Ben Wei wrote in a report today. The impact from the virus may hurt airlines, insurance, consumer staples and retail stocks while boosting health-care and auto shares, according to the report.
Shijiazhuang Yiling led gains for drugmakers, jumping 2.70 yuan to 29.66 yuan.
Beijing increased the minimum downpayment on second home purchases to 70 percent for buyers who apply for loans from the housing provident fund, according to a statement posted on the fund management agency’s website today. China needs to impose a tax on existing properties to ease the impact of unequal wealth distribution after rapid growth in property prices, the China Securities Journal said in a commentary today.
China’s largest cities, including Beijing and Shanghai, restricted multiple home purchases this month after policy makers asked local governments to step up efforts to cool the property market. Retail sales growth in the January to February period was the slowest since 2004, while manufacturing expanded less than economists forecast in March.
Consumer prices probably rose 2.5 percent in March from a year earlier, compared with a gain of 3.2 percent in February, according to the median estimate of 27 economist forecasts compiled by Bloomberg. Exports may have climbed 11.7 percent last month from a year ago, another survey showed. The CPI data are scheduled for tomorrow while trade data will be released on April 10.
The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. retreated 1.7 percent on April 5. The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., slid 0.9 percent to the lowest level since Oct. 10.
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