Markets
Stocks decline on central bank adviser's remarks
By Zhang Shidong (China Daily)
Updated: 2010-08-19 08:14
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SHANGHAI - Mainland stocks fell for the first time in four days after a central bank adviser said real-estate curbs shouldn't be reversed, with losses for developers overshadowing China Everbright Bank Co's rally on its debut.
Poly Real Estate Group Co and China Vanke Co slid at least 1 percent after the Financial News cited Xia Bin as saying the nation shouldn't rush when dealing with the property market. Everbright Bank gained 18 percent on the first day of trading after completing the nation's second-largest initial public offering (IPO) this year.
The Shanghai Composite Index retreated 5.59, or 0.2 percent, to 2666.30 on Wednesday, ending a three-day, 3.7 percent advance. The CSI 300 Index fell 0.1 percent to 2937.36.
"The rebound will come to an end as soon as economic data points to further downside," said Larry Wan, Beijing-based head of investment at Union Life Asset Management Co, which oversees the equivalent of $2.21 billion. "Still the slowdown in the economy will be moderate, preventing any big declines in the stock market."
An index tracking real-estate companies dropped 0.8 percent. The property gauge has rallied 16 percent this quarter on speculation the slowing economy will prompt the government to ease its tightening policies.
The economy is cooling as the government trims credit growth from last year's record $1.4 trillion and discourages multiple-home purchases to check surging property prices. Restrictions this year include higher down-payment and mortgage rates for multiple-home buyers and instructions for lenders to halt third-home loans in areas with "excessive price gains."
Xia said China shouldn't make any short-term changes to its property market measures, the Financial News reported on Wednesday. The nation should take two years to "solve" real estate issues, it said.
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At 18.9 billion yuan ($2.8 billion), Everbright Bank's IPO was the second-largest in China in 2010, a year dominated by small deals until Agricultural Bank of China Ltd's record $22.1 billion offering in Shanghai and Hong Kong. Everbright Bank jumped 18 percent to 3.66 yuan.
"The Chinese IPO market has regained momentum recently," said Josef Schuster, the Chicago-based founder of IPOX Capital Management LLC, which oversees $3 billion. "We also look at that as an important indicator for global sentiment."
A gauge of material stocks rose 1.3 percent for the biggest gain in the CSI 300 Index. Automakers gained after the Shanghai Securities News said sixteen enterprises owned by the central government have formed an alliance to develop electric cars.
Companies based in the country's northeast jumped after the government said reform in the region would be accelerated.
China's capital markets may be on the cusp of a "big bang" as policy makers allow increased access to investors abroad, Nomura Holdings Inc analysts led by Sean Darby said in a note on Wednesday.
Investors opened 253,154 accounts last week, up 7.6 percent from a week earlier, the China Securities Depository and Clearing Corp said on its website on Wednesday.
Hang Seng declines
Hong Kong stocks fell, erasing gains, after reports said mainland will take more steps to curb home prices and potential loan defaults, overshadowing gains in local developers after a city land auction beat analysts' estimates.
The Hang Seng Index retreated 0.5 percent to close at 21022.73 on Wednesday, after climbing as much as 0.7 percent. Twenty-seven stocks dropped while 15 gained among the measure's 43 constituents.
The Hang Seng China Enterprises Index of H shares of mainland companies slid 0.4 percent to 11711.04 on Wednesday.
Bloomberg News