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December 19, 2009

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Land-price curbs hit property shares

SHANGHAI'S key stock index lost more than 2 percent to end the week at a three-week low after property shares dropped on the announcement of more measures to curb land prices.

The Shanghai Composite Index was down 2.05 percent, or 65.19 points, to close at 3,113.89, declining for a fourth day in a row. Turnover dropped to 116.5 million yuan (US$17.1 million) from Thursday's 123.8 million yuan.

The index fell a combined 4.11 percent this week.

China has raised the down payment requirement for land purchases to at least 50 percent of the total price, according to a joint statement released by five government departments, including the Ministry of Finance, Ministry of Land and Resources and the People's Bank of China.

Previously most down payments ranged from 20 percent to 30 percent.

China Vanke Co, the nation's biggest listed property developer, tumbled 6.03 percent to 10.59 yuan. Gemdale Corp retreated 7.82 percent to 13.20 yuan. Poly Real Estate Group sank 7.48 percent to 21.88 yuan. Shanghai Shimao Co dropped 4.83 percent to 15.77 yuan.

"The government's latest move to curb real estate prices has unsettled investors, but the index is expected to become stable in the next week as some might regard it a good time to buy in after the index has fallen for four days," Capital Securities wrote in a research note.

The Industrial and Commercial Bank of China, the nation's biggest lender, lowered 0.77 percent to 5.13 yuan. Shanghai Pudong Development Bank fell 3.13 percent to 20.73 yuan. China Construction Bank was down 1.68 percent to close at 5.86 yuan.

More new share sales are expected in the next week. China CNR Corp, which supplies rail cars used in Beijing's subway, said it plans to raise up to 13.9 billion yuan in a Shanghai IPO, while China National Chemical Engineering Co said it intends to raise 2.92 billion yuan.

Metal producers were hit after gold slid 2.5 percent in New York. Zijin Mining Co buckled 4.27 percent to 9.63 yuan. Jiangxi Copper Co tumbled 6.2 percent to 37.96 yuan. Zhongjin Gold Co lost 4.72 percent to 57.73 yuan.


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