Money
Developers lead stocks lower
By Irene Shen (China Daily)
Updated: 2010-12-29 10:18
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China Vanke leads two-day slump for developers following rate rise
SHANGHAI - Chinese stocks fell for a fifth day, capping the benchmark index's longest losing streak since July, on concern the government will need to step up interest rates increases to curb inflation.
China Vanke Co dropped 4.8 percent on Tuesday, leading a two-day slump for developers, after the government boosted rates over the weekend and Premier Wen Jiabao reiterated his goal for home prices to return to a "reasonable level." Jiangxi Copper Co and Aluminum Corp of China Ltd led declines for metal stocks on prospects that tightening policies may slow economic growth.
The Shanghai Composite Index slid 1.74 percent to 2732.99 at 3 pm on Tuesday, extending a 1.9 percent plunge on Monday, after the People's Bank of China increased key one-year lending and deposit rates by a quarter percentage point on Saturday. The CSI 300 Index lost 1.77 percent to 3044.93 on Tuesday. The CSI Smallcap 500 Index retreated 2.5 percent, adding to a five-day, 9.4 percent slump.
The benchmark measure has fallen 17 percent in 2010, making it the worst performer among the world's 14 biggest stock markets. The government has ordered banks to set aside more reserves six times this year and boosted interest rates twice to tame inflation and curb asset bubbles after record gains in lending and property prices. China reported inflation of 5.1 percent in November, exceeding the previous month's 4.4 percent.
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A gauge tracking developers in the Shanghai Composite slid 3.5 percent, after falling 2.2 percent on Monday. Vanke, the nation's biggest listed property developer, dropped 4.8 percent to 8.33 yuan. Poly Real Estate Group Co, the second biggest, fell 6.18 percent to 12.91 yuan.
China's home prices rose for an 18th month in November as measures, including suspending mortgages for third-home purchases and a pledge to speed up trials of property taxes, failed to limit foreign capital inflows and cool property prices. The central bank boosted interest rates for the first time in three years in October and raised them for a second time on Saturday.
Jiangxi Copper, China's biggest producer of the metal, lost 1.48 percent to 41.18 yuan on Tuesday. Aluminum Corp of China, the listed unit of nation's largest maker of the lightweight metal, dropped 2.09 percent to 9.86 yuan.
China Shenhua Energy Co, the biggest coal producer, retreated 3.55 percent to 24.16 yuan on Tuesday. Yanzhou Coal Mining Co, the nation's second-largest coal producer, slid 3.02 percent to 27.26 yuan.
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