Metro China Property Sales Plunge 70%

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
01 Jun, 2010
New York City

Indexes in China slip led by drop in property transactions and a drop in manufacturing growth. PBOC sells one-year bills at higher yields to boost returns. Sinopec plans to expand Shijiazhuang refinery''s capacity by 60%.

[R]5:00 PM Hong Kong, China – Indexes in China slip led by drop in property transactions and a drop in manufacturing growth. PBOC sells one-year bills at higher yields to boost returns. Sinopec plans to expand Shijiazhuang refinery''s capacity by 60%.][/R]

A slowing Chinese economy led by drop in property transactions and a dip in manufacturing growth caused the stocks to fall for the third straight day.

The Shanghai Composite Index, tracking the bigger of China’s stock exchanges fell along with the CSI 300 Index. A gauge of small-cap stocks retreated 1.9% and the broader indexes fell 1%.

Hong Kong stocks fluctuated and closed lower on moderating growth. The Hang Seng China Enterprises Index of H-shares of Chinese companies slipped and fell 1.3% to 11,341.98.

Hang Seng index in Hong Kong decreased 268.24 or 1.36% to 19,496.95 and CSI 300 index in China lower 29.10 or 1.05% to 2,744.16.

June futures on the Hang Seng Index also fell 0.1% to 19,691.

The Purchasing Manager’s Index fell in May to 53.9 from 55.7 in April, said the Federation of Logistics and Purchasing in an e-mailed statement today, indicating that manufacturing in China expanded slower than estimated in May.

The People’s Bank of China sold one-year bills at 2.0096% yield from the 1.9264% last week in order to boost returns to draw funds after inter-bank loan rates climbed to the highest level since September 2008, according to a statement on its website today.

The repurchase rate in China jumped as high as 4%, reflecting a cash shortage after the central bank advised lenders last month, to set aside more capital as reserves for the third time this year.

Property sales in Beijing, Shanghai and Shenzhen fell as much as 70% in May after governmental tightening mortgage lending. This was reported by Shanghai Securities News citing data from bjfdc.gov.cn.

China had earlier introduced measures restricting pre-sales by developers while curbing loans for third home purchases. The government also raised minimum mortgage rates and tightened down payment requirements for second-home purchasers.

China’s State Council approved the National Development and Reform Commission’s gradual property tax reform, according to a statement on the website of the government body.

Passenger car sales gained 25% in May year-over-year to 885,800 units, the China Automotive Technology & Research Center said in a e-mailed statement today. Vehicle sales increased 29.7% in May from a year earlier to 1.19 million units according to the statement.

Dubai crude rose above the Brent oil at a premium of 28% on May 13, forcing China to buy oil from Angola and Brazil.

Wipro Infrastructure Engineering, the global hydraulics business arm of Wipro, signed an agreement with Wujin Hi-tech Industrial Zone in Changzhou to set up a facility for the manufacture of high-pressure precision hydraulic cylinders and tipping systems.

Honda Motor Co kept production halted at its units in China and will likely keep it closed until tomorrow after some striking employees rejected a pay increase proposal.

Fewer than 100 of the total parts plant’s workforce of 1,900 rejected Honda’s offer of 24% pay increase to 1,900 yuan a month, said Takayuki Fujii, a Beijing-based spokesman of Honda.

Shanghai Movers

China COSCO Holdings Company Limited, the operator of dry-bulk ships, fell 1.5% to 9.76 yuan.

China Petroleum & Chemical Corporation fell 1.2% to 8.51 yuan after the oil refiner is to increase its Shijiazhuang oil refinery''s annual capacity by 60%.

China Merchants Bank Co., Ltd, the lender, fell 0.7% to 131.13 yuan.

China Pacific Insurance (Group) Co., Ltd, the insurer, fell 1.2% to 21.40 yuan.

CITIC Securities Company Limited dropped 1.5% to 19.49 yuan after the broker said its board gave approval to its asset management unit to trade stock-index futures.

Guangdong No.2 Hydropower Engineering Company, Ltd increased 8.8% to 8.02 yuan after the company and its wholly-owned subsidiary, Guangdong Chenzhou Water Investment, won a 1.1 billion yuan build-transfer hydraulic engineering contract from the Jieyang city government in Guangdong province, reports China Securities Journal, citing a company filing.

Hua Xia Bank Co., Limited, the bank, rose 0.9% to 10.64 yuan.

TCL Corporation, the consumer-electronics maker, fell 1.4% to 4.12 yuan.

[HK Movers

Brilliance China Automotive Holdings Limited fell 4.7% to 2.41 yuan.

BYD Company Limited fell 5.1% to HK$62.00 after the carmaker is planning to launch a tablet PC in the first quarter of next year, product marketing manager Steven Jiang said on the sidelines of the Computex show on Tuesday.

China Overseas Land & Investment Limited, the developer, decreased 4.6% to HK$14.64.

Guangzhou R&F Properties Co., Ltd fell 4.3% to HK$9.44.

Sands China Ltd decreased 4.3% to HK$11.04 after the company was upgraded to “neutral” from “underperform” at Credit Suisse Group AG.

SJM Holdings Limited the casino operator fell 0.7% to HK$5.54.