China Stocks Fall for Fifth Day on Property Crackdown, Greece Debt Concern
China’s stocks fell for a fifth day, the longest stretch in 16 months, as the government stepped up measures to cool property prices, and Greece and Portugal’s credit downgrades spurred concerns global growth will slow.
Guangzhou Shipyard International Co. led declines among companies that derive more than 30 percent of their sales from Europe. Poly Real Estate Group Co. slid to a six-week low as the China Daily said efforts to curb property speculation are “just the beginning.” Jiangxi Copper Co. and Aluminum Corp. of China Ltd. dropped at least 0.9 percent as metal prices plunged.
“The stock market is facing systemic risk from the property industry, which accounts for about 25 percent of China’s fixed-asset investment and 10 percent of GDP,” said Larry Wan, deputy chief investment officer at KBC-Goldstate Fund Management Co., which oversees about $583 million. “The economy could be hurt further by exports, if the debt crisis in Europe deteriorates.”
The Shanghai Composite Index dropped 7.60, or 0.3 percent, to 2,900.33 at the close, the lowest close since Oct. 12. The five-day losing streak is the longest since Dec. 31, 2008. The CSI 300 Index slid 0.4 percent to 3,097.35. Futures on the CSI 300 expiring in May, the most active contract, added 0.4 percent to 3,132.8.
Stocks have fallen over the past week on concern government measures to cool the property market will damp consumer spending and curb demand for raw materials. The city of Beijing will issues policies today limiting how many homes residents of the Chinese capital are allowed to buy, the Shanghai Securities News reported today, citing an unidentified person.
The Shanghai Composite has plunged 12 percent in 2010, the world’s fifth-worst performer, as the government unwound monetary stimulus and stepped up measures to prevent a housing bubble inflated by record lending last year.
Greece’s credit rating was cut three steps to BB+, or junk, by Standard & Poor’s, the first time a euro member has lost its investment grade since the currency’s 1999 debut. The Greek move came minutes after the rating company reduced Portugal by two steps to A-.
Guangzhou Shipyard, the smaller unit of China’s biggest shipbuilder, slid 1.7 percent to 21.37 yuan. It relies on Europe for about 61 percent of sales in 2009, according to data compiled by Bloomberg. Xinjiang Chalkis Co., a ketchup maker, lost 2 percent to 14.41 yuan. The company counted on Europe for 98 percent of sales last year, according to Bloomberg data.
“We are facing the exit of stimulus packages domestically and worsening debt crisis overseas,” said Zhang Qi, an analyst at Haitong Securities Co. in Shanghai. “Both factors will weigh on risky assets such as stocks.”
Jiangxi Copper, China’s biggest producer of the metal, lost 1.5 percent to 33.81 yuan. Aluminum Corp. of China, the nation’s biggest maker of the lightweight metal, slipped 0.9 percent to 11.54 yuan. Zhuzhou Smelter Group Co., China’s biggest producer of refined zinc, retreated 3.7 percent to 12.87 yuan.
The London Metal Exchange Index of six industrial metals, including copper and zinc, plummeted 4.6 percent, its biggest decline since June 22. Crude oil for June delivery dropped 2.1 percent yesterday in New York to $82.44, the lowest settlement price since April 19.
A gauge of property stocks in the Shanghai Composite fell for a third day, losing 0.7 percent. Poly Real Estate, the second-largest developer by market value, retreated 1.9 percent to 12.45 yuan, the lowest since March 2009. China Merchants Property Development Co. lost 0.8 percent to 17.66 yuan.
A halt on share sales by Chinese property developers may affect 45 companies with plans to raise as much as 110 billion yuan ($16 billion), the China Daily reported today, citing an unidentified source close to the China Securities Regulatory Commission. The newspaper also said in an editorial policymakers must create more targeted measures to curb property speculation.
The following companies were among the most active in China’s markets. Stock symbols are in brackets after companies’ names.
Bank of Beijing Co. (601169 CH) added 2.3 percent to 13.49 yuan after saying first-quarter profit rose 39 percent to 2.09 billion yuan.
International China International Travel Service Corp. (601888 CH) advanced 5.3 percent to 19.83 yuan after the company said first-quarter net income rose 82 percent on a year earlier to 109 million yuan. Profit for 2009 increased 41 percent.
Xi’an Shaangu Power Co. (601369 CH) gained 24 percent from its offer price to 19.27 yuan on the first day of trading in Shanghai.
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