Developers Plunge in Shanghai

Mayank Mehta
19 Apr, 2010
New York City

Stocks in Shanghai plunged sharply after China tightened further property lending and restricted access to home lending. Poly Real Estate Group plunged more than 9% and China Vanke declined 8%. Ping An 2009 net profit up more than 8-fold. China Eastern Airlines Corp returned to profit in 2009.

[R]7:00 AM Hong Kong, China – Stocks in Shanghai plunged sharply after China tightened further property lending and restricted access to home lending. Poly Real Estate Group plunged more than 9% and China Vanke declined 8%. Ping An 2009 net profit up more than 8-fold. China Eastern Airlines Corp returned to profit in 2009.[/R]

Stocks in Hong Kong and Shanghai fell sharply following a weakness in the U.S. indexes and world air transport remain disrupted.

Stocks in Shanghai dropped sharply after China State Council asked banks to stop lending for third homes and not lend to borrowers without the proof of income and local residency status.

The government took the drastic measure after properties prices continue to rise unabated. Prices at largest 70 cities increased 11.7% in March prompting worries that China may face commercial real estate and home market bubble.

Poly Real Estate dropped 9.3% and China Vanke declined 8.2%. Evergrande Real Estate Group Limited dropped 6%.

Worldwide air travel continues to be disrupted for the fourth day in a row and more than 60,000 flights are canceled in Europe.

Airports are closed in Ireland, Denmark, Norway, Sweden, Finland, Belgium and Germany after cautious regulators monitor volcanic ash cloud in the northern Europe.

U.S. securities regulators surprised markets after they alleged Goldman Sachs engaged in a mortgage securities fraud that defrauded investors with $1 billion and failed to inform clients that the broker was looking to profit the failure of these bonds.

Commodity stocks also plummeted as gold prices fell 0.3% to $1,134 per ounce and crude oil prices slipped 1.8% to $81.7 per barrel.

Hang Seng index in Hong Kong decreased 460.09 or 2.10% to 21,405.17 and CSI 300 index in China lower 179.91 or 5.36% to 3,176.42.

Shanghai Movers

Air China Limited declined 8.0% to 12.99 yuan after worldwide air travel linked to Europe remain disrupted.

CITIC Securities Company Limited closed unchanged at 28.94 yuan after the broker and Credit Agricole is nearing a deal to form a global brokerage joint venture that could be announced as early as Monday, according to a Bloomberg report.

China Vanke Co., Ltd the developer decreased 8.1% to 8.30 yuan.

China Southern Airlines Company Limited declined 6.4% to 8.41 yuan after the carrier said first-quarter profit probably jumped about 400% from a year earlier.

Dongfang Electric Corporation Limited dropped 2.7% to 46.87 yuan after the maker of power equipment had its recommendation upgraded to “neutral” from “underweight” at JPMorgan Securities Asia Pacific.

Ping An Insurance (Group) Company of China, Ltd fell 3.6% to 49.21 yuan after the insurer said full-year net profit surged 879% to 13.88 billion yuan.

HK Movers

China Pacific Insurance (Group) Co., Ltd fell 3.0% to HK$33.65.

Country Garden Holdings Company Limited dropped 7.1% to HK$2.47 after the company announced the offering of $550 million 11.2% senior notes due 2017.

Evergrande Real Estate Group Limited the developer decreased 5.8% to HK$3.07.

Guangzhou R&F Properties Co., Ltd the real-estate company decreased 8.5% to HK$10.92.

United Company RUSAL Limited fell 2.5% to HK$9.56 after the aluminum producer returned to profit last year as demand for metals improved and the value of its 25% stake in OAO GMK Norilsk Nickel more than doubled.