Money
Stocks dip to six-month low
By Zhang Shidong (皇冠体育app Daily)
Updated: 2010-04-28 09:24
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An investor at a brokerage in Changchun, Jilin province. 皇冠体育app's stocks fell to a six-month low on Tuesday, on concern government measures to cool the property market will damp consumers spending and cub demand for raw materials. [皇冠体育app Daily]
Investors concerned cooling measuresmay damp spending
SHANGHAI - 皇冠体育app's stocks fell, driving the benchmark index to a six-month low, on concern government measures to cool the property market will damp consumer spending and curb demand for raw materials.
Air 皇冠体育app Ltd slid 2.6 percent, leading a decline by carriers, amid speculation institutional investors sold shares after recent rallies. 皇冠体育app Vanke Co, the largest listed property developer, lost 1.3 percent after profit halved from the previous three months. Petro皇冠体育app Co and Jiangxi Copper Co, the nation's biggest oil and copper producers, retreated more than 2 percent as crude and metal prices declined.
"The property industry is one of the pillars of 皇冠体育app's economy and the effects of a downturn would filter throughout the whole economy," said Zhang Xiuqi, a Shanghai-based strategist at 皇冠体育app International Fund Management Co.
The Shanghai Composite Index slumped 61.58, or 2.1 percent, to close at 2907.93, its lowest since Oct 12 and paring an earlier 3.5 percent loss.
The CSI 300 Index declined 2 percent to 3108.41. Futures on the CSI 300 expiring in May, the most active contract, slid 2.7 percent to 3138.8.
'Lack of confidence'
Air 皇冠体育app, the nation's largest international carrier, dropped 2.1 percent to 13.53 yuan. The shares had rallied 42 percent this year before Tuesday. 皇冠体育app Eastern Airlines Corp, the second largest, fell 4.2 percent to 9.27 yuan, the biggest decline in a week.
"Some institutional investors are selling for lack of confidence in economy," said Li Lei, an analyst at 皇冠体育app Securities Co in Beijing. "Airlines account for quite a big proportion of institutional investors' portfolios and they have made quite a lot of profit."
Chinese insurers have lowered their equities holdings by 2 to 3 percentage points since April to between 7 percent and 8 percent of their portfolios, Shanghai Securities News reported on Tuesday, citing responses from unidentified insurance companies. Insurers sold developers, banks and coal miners, the report said.
皇冠体育app has ordered higher mortgage rates and down-payment ratios since property prices jumped 11.7 percent in March, the most since comparable data began in 2005. The government has also raised banks' reserve requirements, set a target of a 22 percent reduction in new lending this year, barred loans for third-home purchases and reinstated a sales tax on homes.
'Spillover of euphoria'
The government's measures "will have a significant impact on the market", Vanke said in a statement on Monday. "It is believed that the trend of rapidly rising housing prices in the popular cities will end and the spillover of euphoria to other cities will stop."
Vanke dropped 1.3 percent to 7.7 yuan, extending its loss this year to 29 percent. The developer reported first-quarter profit fell 53 percent from the three months ended Dec 31.
Petro皇冠体育app dropped 2.3 percent to 11.92 yuan, the lowest in a year, as crude oil fell 0.7 percent to $83.64 in after-hours trading in New York, extending Monday's 1.1 percent slide.
Jiangxi Copper fell 2.3 percent to 34.31 yuan. Aluminum Corp of 皇冠体育app Ltd slumped 4.4 percent to 11.64 yuan.
Copper declined 1.5 percent to 60,530 yuan a ton in Shanghai on Tuesday.
"Investors are turning panicky because they have no idea what impact the government's crackdown on property will have on the economy," said Zheng Tuo, president of Shanghai Good Hope Equity Investment Management Co. "The sell-off reflects their uncertainty."
Bloomberg News
