China Property Prices Surge; Volumes Fall

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
10 Jun, 2010
New York City

Stocks in China fell today on additional lending tightening concern after a government report showed that property prices across 70 cities rose 12.4% in May from a year earlier. The developers and commodity producers led the decliners.

[R]5:00 PM Hong Kong, China – Property prices across 70 cities in China rises 12.4% in May, the second largest increase after April increase of 12.8%. However, transactions decline 25%. China Vanke''s property sales declined 20% in May. Merchants Energy expects 110% surge in first half net profit.[/R]

Stocks in China fell today on additional lending tightening concern after a government report showed that property prices across 70 cities rose 12.4% in May from a year earlier. The developers and commodity producers led the decliners.

The Shanghai Composite Index, tracking the bigger of China’s stock exchanges dropped 0.8% or 21.29 to close at 2,562.28. The CSI 300 Index declined 1.2% to close at 2,750.02.

The Hang Seng Index rose 0.1% to close at 19,632.70 reversing earlier losses of as much as 0.5%.

Property prices in China rose at the second-fastest pace of 12.4% in May from a year earlier, compared to a record 12.8% in April from a year earlier, according to data released by the National Bureau of Statistics on its Web site today.

The data covering 70 cities in China however shows that value of sales declined 25% from the previous month due to lower transaction volumes, showing that tightening measures are yet to bring down prices.

Sales volumes in Beijing, Shanghai, and Shenzhen, the three wealthiest cities, fell as much as 70% in May from the previous month, while land sales for residential development projects across 70 cities covered fell by 14%, the official Shanghai Securities News had reported earlier this month.

China’s exports rose 48.5% in May from a year earlier, while imports surged 48.3%, leaving a trade surplus of $19.53 billion, according to details posted on the Custom Bureau’s Web site today.

Japanese pachinko game maker Universal Entertainment Corp, the biggest shareholder of Wynn Resorts Ltd, is planning a Hong Kong IPO within three years after opening the first phase of the Manila casino resort scheduled in 2012.

“We plan to list in Hong Kong and the funds will help finance expansion of the $2.7 billion Manila casino resort project,” said Chairman Kazuo Okada. The Manila project will be built on a 40-hectare site and may cost between $2.7 billion to $2.8 billion and construction is expected to begin this month, said Okada.

He declined to provide an estimate of the size of the IPO.

Honda Motor Co said it will keep two car factories in China closed for the second day today because of a shortage of parts from Foshan Fengshu Autoparts Co. The workers at this parts factory had ended their strike last night after meeting with local government, union and company officials yesterday to discuss their demands.

Honda Motor Co later said they plan to restart the two closed car factories in China from tomorrow. Meanwhile workers at Honda’s third parts supplier, Honda Lock (Gaungdong) Co, remain on strike after walking out yesterday, the company said today.

Shanghai Movers

China Vanke Co., Ltd fell 2.0% to 7.15 yuan after the property developer said that its property sales dropped 20.2% year on year to 5.11 billion yuan in May.

China Merchants Energy Shipping Co., Ltd fell 0.8% to 4.63 yuan after the operator of international oil tankers expects to record a 90% to 110% year-on-year surge in first half net profit attributable to shareholders, reports China Securities Journal, citing a company filing.

China Merchants Securities Co Ltd, the broker, fell 1.1% to 21.49 yuan.

China State Construction Engineering Corporation Limited fell 1.4% to 3.50 yuan after the housing contractor plans to transfer part of its equity holdings in its real estate subsidiary company, Hunan Zishanhu Property, for 73.18 million yuan, according to guandian.cn, citing a company announcement released by Tianjin Equity Exchange.

CITIC Securities Company Limited, the broker, fell 1.8% to 19.88 yuan.

Poly Real Estate Group Co., Ltd fell 2.2% to 11.05 yuan.

[HK Movers

China Resources Land Limited fell 1.1% to HK$14.42.

China Coal Energy Company Limited, the producer of the fuel, increased 4.1% to HK$10.46.

CNOOC Limited rose 2.7% to HK$12.70 after the offshore energy explorer expects stricter U.S. offshore drilling regulations following the massive oil spill in the Gulf of Mexico will drive energy exploration firms to look elsewhere and Asia, with its growing energy market, may be particularly tempting.

Datang International Power Generational Co., Ltd rose 3.0% to HK$3.09 after the electricity producer said that its parent company, China Datang Corporation, obtained approval from the state-owned Assets Supervision and Administration Commission to conduct a private placement for Datang International Power. A report in China Securities Journal cited a company filing.

Li & Fung Limited, the supplier for retailers, rose 0.5% to HK$35.60.