Markets

Equities down on possible asset bubble moves - May 25

By Zhang Shidong (China Daily)
Updated: 2010-05-26 10:03

SHANGHAI: Mainland stocks fell for the first time in three days on speculation the government will step up measures to avert asset bubbles even as Europe's debt crisis threatens to halt the global recovery.

Poly Real Estate Group Co paced declines by developers after the Economic Observer said Shanghai will start a property tax trial next month. PetroChina Co lost 2.3 percent and Jiangxi Copper Co dropped 1.6 percent as raw-material prices fell amid concerns over the health of European finances.

Related readings:  China's stocks close down Tuesday  Equities rally as economy concerns wane

"The market is still worried about the introduction of additional harsh measures such as the property tax, which would likely lead to a 20 percent and 30 percent decline in housing prices," said Zheng Tuo, president of Shanghai Good Hope Equity Investment Management Co. "That would exacerbate the risk of a double-dip for the economy."

The Shanghai Composite Index retreated 50.79, or 1.9 percent, to close at 2622.63 on Tuesday. The CSI 300 Index declined 2.1 percent to 2813.94.

Poly Real Estate lost 4 percent to 11.66 yuan ($1.71). And China Vanke Co dropped 3.9 percent to 7.40 yuan.

China's domestic fund managers cut stock holdings in their portfolios by 4 percentage points in the past two weeks, according to a report by Macquarie Securities Ltd analysts Shirley Zhao and Michael Kurtz.

Stocks made up 74 percent of China's 350 open-ended A-share funds, with the rest in bonds, cash and money market instruments, the report said, citing data from Wind Info.

Hang Seng declines

Hong Kong stocks fell on concern the mainland's efforts to cool the property market and the fallout from Europe's debt crisis will hurt earnings.

The Hang Seng Index fell 3.5 percent to 18985.50, its lowest close since July 17. The Hang Seng China Enterprises Index sank 4.6 percent to 10729.05, extending its decrease to 22 percent from its 52-week high on Nov 16.