Equities decline amid concern over property tightening

Mainland stocks fell the most in a week after the Xinhua News Agency reported regulators will “strictly implement” policies aimed at curbing housing prices and Citic Securities Co said the rally for small caps may end.

“You won’t see very impressive growth in the real estate sector in the foreseeable future as the government won’t phase out its curbing measures until there’s a real fall in property prices,” said Zhao Zifeng, who helps oversee about $10.2 billion at China International Fund Management Co in Shanghai.

The Shanghai Composite Index dropped 15.92, or 0.6 percent, to 2622.88 on Wednesday. The CSI 300 Index retreated 0.7 percent to 2884.04, led by healthcare and technology companies. The CSI Smallcap 500 Index fell 1.3 percent, snapping a gain of 5.1 percent over the past four days.

The Shanghai gauge has rebounded 11 percent from this year’s low on July 5 as investors speculated the government would ease monetary policy to spur growth. That’s trimmed this year’s loss to 20 percent, after the government increased down payment requirements on home sales and ordered banks to set aside more deposits as reserves to curb asset bubbles.

A gauge of property companies declined 1 percent after Xinhua reported the China Banking Regulatory Commission (CBRC) will restrain “speculative” investment in real estate, support the construction of affordable housing and control risk. Xinhua cited Ye Yanfei, deputy head of the CBRC’s statistics department.

Property stocks may underperform the market this month as rising real estate prices spur policy risks, analysts led by Li Yamin at Shenyin & Wanguo Securities wrote in a report on Wednesday. Shanghai’s new home sales rose 70 percent last month while prices rebounded 9.5 percent, Shanghai UWin Real Estate Information Services Co said on Wednesday.

The CSI Smallcap 500 Index fell the most in a week, led by healthcare and technology stocks, the two biggest gainers this year. Both groups have risen at least 6.7 percent in 2010.

“Small cap stocks are due for a correction after the recent rally,” Tang Chuan, analyst at Citic Securities, the nation’s largest brokerage by market value, wrote in a report on Wednesday. “Investors also need to beware of the risks of a sharper deceleration in profit growth in the third quarter.”

The Purchasing Managers’ Index, compiled by the Federation of Logistics and Purchasing, rose to 51.7 in August from 51.2 a month earlier, the Federation of Logistics and Purchasing said on its website on Wednesday. The reading was more than the median estimate of 51.5 in a Bloomberg News survey of 17 economists. A reading higher than 50 shows an expansion. A separate PMI released by HSBC Holdings Plc and Markit Economics gained to 51.9 from 49.4.

Hang Seng gains

Hong Kong stocks advanced, led by shares of mainland companies after the nation’s manufacturing expanded at a faster pace in August.

The Hang Seng Index rose 0.4 percent to close at 20623.83 on Wednesday. Concern global economic growth may slow has dragged down the Hang Seng Index by 5.4 percent from a four-month high on Aug 9. Shares on the measure trade at an average of 13.3 times estimated earnings.

The Hang Seng China Enterprises Index of H shares of mainland companies gained 0.8 percent to 11498.94 on Wednesday.

Posted by on September 2, 2010. Filed under Stock. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry