China’s Stocks Fall as Volatility Jumps; Property Shares Slump
China’s stocks fell, led by property and cement companies, on concern government measures to limit home-price gains will hurt profit. A gauge of price swings on the benchmark index rose to a one-year high.
Poly Real Estate Group Co. (600048) slid to a two-week low as Guodu Securities Co. said investors are concerned there will be property tax trials imposed on more cities soon. Anhui Conch Cement Co. retreated 3.8 percent as CSC International Holdings Ltd. said real-estate tightening measures have created uncertainty about cement demand. Goertek Inc., a supplier to Apple Inc., dragged down a gauge of Chinese technology stocks.
The Shanghai Composite Index (SHCOMP) slid 0.9 percent to 2,199.31 at the close, the third decline in four days. A gauge of 100-day volatility rose to 20.4, the highest level since April 12, 2012. The CSI 300 Index lost 1.1 percent to 2,467.88. The Hang Seng China Enterprises Index (HSCEI) advanced 1.2 percent in Hong Kong.
“Investors are still very concerned about the economy after the slew of bad data recently,” Deng Wenyuan, an analyst at Soochow Securities Co., said by phone from Suzhou, near Shanghai. “Financials and property stocks get affected the most because they take up a large percentage of the index and they are cyclical stocks, which don’t do well when economic growth is slowing.”
The Shanghai Composite slumped 9.7 percent from a Feb. 6 high to yesterday on concern slowing growth will hurt earnings. The economy expanded 7.7 percent in the first quarter, missing estimates, as industrial production and fixed-asset investments in March fell short of forecasts. The index trades at 12 times reported profit, within 2 percent of the lowest level since Dec. 21, data compiled by Bloomberg show.
A gauge of developers in the Shanghai Composite fell 1.9 percent, the most among the five industry groups. Poly Real, the second-largest developer, lost 3.3 percent to 11.58 yuan. Gemdale Corp. (600383) retreated 3.1 percent to 6.89 yuan. Investors are concerned there will be property tax trials imposed on more cities soon, Guodu Securities analyst Zhang Wei said in Beijing in a phone interview today.
China in January 2011 imposed a property tax for the first time in Shanghai and Chongqing as part of a three-year campaign to rein in home prices. Hangzhou will probably start a property tax next month, the China Securities Journal said yesterday, citing unidentified people. Home prices in March rose in 68 of 70 cities tracked by the government, the most since September 2011, the National Bureau of Statistics said April 18.
Anhui Conch, the biggest cement producer, slid 3.8 percent to 17.62 yuan. Huaxin Cement Co. slumped 5.6 percent to 14.11 yuan. Recent reports on property tax trials and Guangzhou’s tightening measures have created uncertainty on cement demand, CSC International analyst Zhu Jixiang said by phone today.
Goertek fell 5.7 percent to 50 yuan, dragging technology stocks lower. Apple has come under pressure to release a new hit product that can live up to the success of the iPhone and iPad, sending the shares down more than 40 percent since September and wiping out about $280 billion in market value.
Jiangsu Yueda lost 8.8 percent to 12.81 yuan, the lowest since Jan. 24. Citic Securities Co. said the company’s first quarter profit was lower than market projection without saying what the estimates were.
Companies including Air China Ltd., Bank of China and Baoshan Iron & Steel Co. report quarterly earnings today. Quarterly profit at 52 percent of Shanghai Composite companies missed estimates, according to data on 86 corporate results compiled by Bloomberg since Feb. 16.
“We can expect shares to continue fluctuating in the short term,” Liu Guangming, an analyst at Dongxing Securities Co., said today from Beijing. “Investors are still divided over their outlook for shares. There are concerns over the economic data and we are still unsure if first-quarter earnings would outperform.”
SouFun Holdings Ltd. (SFUN) jumped to a one-month high and solar makers rallied. American depositary receipts of Huaneng Power (HNP), China’s largest electricity producer, surged to the highest level since 2007. Chip foundry Semiconductor Manufacturing International Corp. climbed 2.5 percent.
Huaneng was raised to hold from sell by Bank of China, while Semiconductor Manufacturing posted net income that was four times the average analyst estimate. Seventeen of the 55 members in the Bloomberg China-US gauge are reporting quarterly results this week as the index trades at 12 times estimated earnings, 50 percent below its valuation in March 2012.
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