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January 27, 2010

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Property shares pull index down

SHANGHAI'S stocks tumbled more than 2 percent to close at a three-month low yesterday as property shares sank on concerns that possible tighter mortgage policies will cool the real estate sector and hurt China's economic recovery.

The benchmark Shanghai Composite Index fell 2.42 percent, or 75.02 points, to close at 3,019.39. Turnover totaled 109.3 billion yuan (US$16 billion).

The barometer has lost 7.86 percent since the beginning of this year on investor fears that last year's robust new lending would not continue and may hurt the nation's real economy.

"Speculation of a tighter monetary policy sent the index down, but companies with good profits in the past year may perform better as some of the shares are still undervalued," said Xu Xiaoyi, an analyst of GF Securities.

The Shanghai Securities News yesterday cited an unnamed official as saying that the pace of lending growth slowed in the third week of January compared with the first two weeks of the month.

It said in a separate report that the Bank of China, the Industrial and Commercial Bank of China and the Bank of Communications have suspended second-home mortgages in Nanjing since last weekend in order to ensure a reasonable growth in new loans.

The Industrial Bank fell 2.25 percent to 33.83 yuan, and China Construction Bank dropped 1.18 percent to 5.84 yuan.

China Vanke Co, the country's biggest listed real estate developer, fell 3.15 percent to 9.22 yuan, and Poly Real Estate Group tumbled 4.82 percent to close at 18.97 yuan.


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