Shanghai's stocks dive as property nerves hit
By Pan Xiaoyi |
May 7, 2010, Friday
|
Print Edition
Print Edition
SHANGHAI shares tumbled more than 4 percent yesterday to an eight-month low, with property developers the hardest hit.
The downward spiral was driven by nervousness that the central government may launch even further policy tweaks to curb the overheated property market.
The benchmark Shanghai Composite Index, which tracks the bigger mainland bourse, lost 4.11 percent to 2,739.7 points yesterday.
A total of 679.3 billion yuan (US$99.51 billion) was wiped off in Shanghai compared with Wednesday's close.
The Shanghai gauge has slumped 16.4 percent this year, becoming the worst-performing market in Asia, as the government stepped up measures to head off property speculation and to avert the risks of bad loans.
Pressures
Poly Real Estate Group, China's biggest state-owned listed developer, tumbled 6.7 percent to 10.66 yuan.
China Enterprise Co dived 7.2 percent to 7.25 yuan and China Vanke Co lost 4.1 percent to 7.18 yuan.
"In the short term, developers will face strong selling pressure amid worries that more tightening measures are in the pipeline," said Liu Yu, an Orient Securities Co trader.
Shenzhen, site of the mainland's second stock exchange, yesterday started to implement the central government directive to suspend housing credit to third or more home buyers, after similar moves by the Beijing city government, which also raised the down-payment for the mortgages of a second apartment to 50 percent from 40 percent.
Market investors were worried other cities would follow to cool the property market, said Zhang Gang, a Southwest Securities Co analyst.
New policies have already started to impact on the national housing market.
Hong Kong-listed Evergrande Real Estate Group yesterday started to offer a 15 percent discount on its assets across the country.
"It is a signal that Evergrande has decided to lead the way in cutting prices," said Huang Shuo, an analyst from Guoyuan Securities Co.
"Listed property developers on the Shanghai bourse may have to face price drops of as much as 15 percent, blurring their earnings prospects."
Huaxia Bank Co led the falls in the banking sector yesterday after the lender said it would raise up to 20.8 billion yuan in a private placement to shore up capital. Shares of Huaxia plunged by the 10 percent daily cap to 11.45 yuan.
Shanghai Pudong Development Bank Co slid 6.3 percent to 19.04 yuan and the Industrial and Commercial Bank of China eased 2.2 percent to 4.4 yuan.
Turnover was 113.2 billion yuan, with losses outnumbering gains 825 to 62 and six remaining unchanged.
The downward spiral was driven by nervousness that the central government may launch even further policy tweaks to curb the overheated property market.
The benchmark Shanghai Composite Index, which tracks the bigger mainland bourse, lost 4.11 percent to 2,739.7 points yesterday.
A total of 679.3 billion yuan (US$99.51 billion) was wiped off in Shanghai compared with Wednesday's close.
The Shanghai gauge has slumped 16.4 percent this year, becoming the worst-performing market in Asia, as the government stepped up measures to head off property speculation and to avert the risks of bad loans.
Pressures
Poly Real Estate Group, China's biggest state-owned listed developer, tumbled 6.7 percent to 10.66 yuan.
China Enterprise Co dived 7.2 percent to 7.25 yuan and China Vanke Co lost 4.1 percent to 7.18 yuan.
"In the short term, developers will face strong selling pressure amid worries that more tightening measures are in the pipeline," said Liu Yu, an Orient Securities Co trader.
Shenzhen, site of the mainland's second stock exchange, yesterday started to implement the central government directive to suspend housing credit to third or more home buyers, after similar moves by the Beijing city government, which also raised the down-payment for the mortgages of a second apartment to 50 percent from 40 percent.
Market investors were worried other cities would follow to cool the property market, said Zhang Gang, a Southwest Securities Co analyst.
New policies have already started to impact on the national housing market.
Hong Kong-listed Evergrande Real Estate Group yesterday started to offer a 15 percent discount on its assets across the country.
"It is a signal that Evergrande has decided to lead the way in cutting prices," said Huang Shuo, an analyst from Guoyuan Securities Co.
"Listed property developers on the Shanghai bourse may have to face price drops of as much as 15 percent, blurring their earnings prospects."
Huaxia Bank Co led the falls in the banking sector yesterday after the lender said it would raise up to 20.8 billion yuan in a private placement to shore up capital. Shares of Huaxia plunged by the 10 percent daily cap to 11.45 yuan.
Shanghai Pudong Development Bank Co slid 6.3 percent to 19.04 yuan and the Industrial and Commercial Bank of China eased 2.2 percent to 4.4 yuan.
Turnover was 113.2 billion yuan, with losses outnumbering gains 825 to 62 and six remaining unchanged.
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