China’s
stocks plunged, dragging
down the
CSI 300 (SHSZ300) Index by the most in two years, after the
government ordered more measures to cool property prices and
growth in the nation’s services industries slowed.
The CSI 300, representing the nation’s biggest companies in
the
Shanghai and Shenzhen stock exchanges, fell 4.6 percent to
2,545.72 at the close, the most since November 2010, while the
Shanghai Composite Index (SHCOMP) slid 3.7 percent to 2,273.40, the most
since August 2011. China Vanke Co., the nation’s largest
property developer, led a gauge of real-estate companies to the
steepest tumble since June 2008. Anhui Conch Cement Co. and Sany
Heavy Industry Co. dropped by more than 8 percent.
Pedestrians are seen on a bridge
with a ticker displaying financial data in front of the Oriental Pearl
Tower in the Pudong area of Shanghai. Photographer: Tomohiro
Ohsumi/Bloomberg
China’s cabinet on March 1 told cities with “excessively
fast” price gains to raise down-payment requirements and
interest rates on second-home mortgages and ordered individuals
selling properties to “strictly” pay a 20 percent tax on the
sale profit when the original purchase price is available, a
levy that is being easily avoided.
“When there are new rules like these, it extends far
beyond property shares,” Zhang Yanbin, an analyst with Zheshang
Securities Co. in Shanghai, said by phone today. “There have
been talks of property measures in the past few weeks, leading
to declines in the market. The news over the weekend was
evidence of a detailed measure, hence the loss is much bigger.”
The Shanghai
index’s losses pared gains for the year to 0.2
percent and trades for 9.4 times projected 12-month earnings,
the lowest since December. The benchmark measure had rallied as
much as 24 percent from an almost three-year low on Dec. 3 on
speculation the nation’s economic growth would rebound from the
slowest pace since 1999.
Economic Outlook
A
purchasing managers’ index released yesterday showed the
nation’s services industries expanded at the slowest pace in
five months. A government manufacturing PMI gauge released last
week missed estimates. Chinese legislators begin an annual
conference tomorrow, during which the government usually
announces economic targets for the year.
The
Hang Seng China Enterprises Index (HSCEI) lost 2.4 percent.
Shanghai Composite trading volumes were 25 percent higher than
the 30-day average as 50-day volatility climbed to 22.09, the
highest level in more than a year, according to data compiled by
Bloomberg.
A gauge of
developers in the Shanghai Composite Index
tumbled 9.3 percent, the most since June 2008. Vanke, the
nation’s largest publicly traded developer, tumbled 10 percent
to 10.84
yuan. Gemdale Corp. sank 10 percent to 6.42 yuan, the
biggest loss since Aug. 31, 2009. Poly Real Estate Group Co.
also slumped 10 percent to 11.37 yuan.
Property Curbs
The People’s Bank of China’s regional branches may
implement the measures in accordance with the price-control
targets of local governments, the State Council said in a
statement on its website on March 1. Cities facing “relatively
large” pressure from rising house prices must further tighten
home-purchase limits, according to the statement.
“The new measures would immediately affect buyers’
sentiment and hence sales volumes,” UBS AG analysts including
Eva Lee wrote in a report today. “The new measures will
’freeze’ the entire market and delay the originally planned
sales schedules planned for the near term.”
China Minsheng Banking Corp. retreated 6.8 percent to 9.49
yuan, while
Industrial Bank Co. (601166) dropped 9 percent to 18.34 yuan
amid concern home lending will slow. Anhui Conch, the biggest
cement producer, lost 10 percent to 17.88 yuan on speculation
fewer home purchases will damp demand for building materials.
Sany Heavy Industry declined 8.6 percent to 10.77 yuan.
“Property is very wide-reaching,” Zheshang Securities’
Zhang said. Real-estate curbs “impact other sectors like banks
and cement companies, so you see a huge drag on the market
today.”
Brokerages Drop
Citic Securities Co., the largest listed brokerage, lost
6.5 percent to 13.81 yuan. Haitong Securities Co., the second
biggest, sank 6.4 percent to 11.86 yuan, the most since Aug. 13.
The China Securities Regulatory Commission is likely to
consider resuming IPOs after completing fiscal checks on
companies pending listing, the
Securities Times reported today,
citing the regulator’s vice chairman Zhuang Xinyi. Zhuang didn’t
disclose a timetable for resuming IPOs, the newspaper said.
The non-manufacturing Purchasing Managers’ Index fell to
54.5 in February from 56.2 in January, the National Bureau of
Statistics and China Federation of Logistics and Purchasing said
in a statement yesterday. The index’s reading has been above 50,
which indicates expansion, for at least two years.
Pressure on China to tighten monetary policy is easing as
inflation will be “relatively low” this month due to slowing
food-price gains, People’s Bank of China adviser Song Guoqing
said.
People’s Congress
Premier
Wen Jiabao will outline economic policies at the
start of the National People’s Congress in Beijing as the
government grapples with sustaining a recovery from the slowest
growth in 13 years without triggering a resurgence in consumer
and asset-price inflation. While the government has pledged to
boost incomes and consumption, last week’s decision to intensify
a three-year crackdown on the
property market may damp the
nation’s rebound.
“There will be a lot of fluctuations ahead of the meetings
as investors await measures announced by the government,” Zhou Lin, an analyst at Huatai Securities Co., said by phone from
Nanjing. “There’s definitely concern about the economy’s
recovery after the weak services PMI.”
The
Bloomberg China-US 55 Index (CH55BN) added 0.1 percent in
New
York on March 1. The
iShares FTSE China 25 Index Fund (FXI), the
largest Chinese
exchange-traded fund in the U.S., declined 0.9
percent to $38.60 for a weekly gain of 0.2 percent.
Ambow Education Holding Ltd. tumbled 31 percent to $1.13
last week. The company was sued by investors who accuse it of
orchestrating a “fake acquisition” to facilitate an initial
public offering in the U.S.
12:40 PM
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