Home Mortgage Risk High Says China Regulator

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

China Banking Regulatory Commission said in its annual report published on its Web site that it is seeing growing credit risks in the real estate industry and warned that non-performing loans could pose a threat to the economy.

[R]5:00 PM Hong Kong, China – Stocks in Hong Kong traded higher. China Banking Regulatory Commission sees threat of home mortgage loan risk spreading. Strike is withdrawn in parts factory of Honda in Guangdong province.[/R]

Stocks in Hong Kong rose for the sixth continuous day after report by a U.S agency showed that a leading economic indicator on China jumped the most in 14 months in April.

Hang Seng Index gained 0.1% to close at 20,062.15 with five stocks advancing for every three that dropped.

New York-based Conference Board said on its Web site today that a measure of economic growth in China for April gained 1.7% as compared to a revised 1.2% in March, and reached 147.1.

China Banking Regulatory Commission said in its annual report published on its Web site that it is seeing growing credit risks in the real estate industry and warned that non-performing loans could pose a threat to the economy.

Some banks have transferred loans off their balance sheets in an effort to circumvent regulatory requirements of capital and loan loss provisioning. As a result the risks associated with home mortgages are growing and this may lead to a chain effect in these loans, the regulator said in its report. The regulator has also asked banks to report on this risk exposure by the end of June to help prevent issue of more such loans.

The regulator also said in its report that the forces driving a sustained growth in the nation’s economy remains weak, wherein structural imbalances are acute, external trade is being threatened by rising protectionism, while unemployment pressures continue to remain.

Strike at the parts factory in Guangdong province of southern China for Honda Motor Co, was withdrawn by workers after setting a deadline of June 18 for reaching a wage settlement.

“The company will listen to worker’s demand again and then give an answer on June 18,” said Hirotoshi Sato, a spokesman for Honda Lock in Miyazaki, Japan.

The Tokyo-based Honda Motor co wholly owns Honda Lock and operates the Zhongshan factory through a joint venture with the local township government. The factory supplies key systems, door handles, and sensors for Honda’s Chinese car production.

[HK Movers

China Mengniu Dairy Company Limited added 2.1% to HK$24.35 after the dairy products manufacturer was upgraded to “outperform” from “neutral” at Credit Suisse Group AG.

CLP Holdings Limited rose 0.09% to 55.45 yuan.

Far East Consortium International Limited rose 0.09% to HK$2.04 after the real estate company recommends final dividend.

Sau San Tong Holdings Limited increased 2.8% to HK$0.18 after the seller of health and beauty products reported a full-year loss of HK$24.96 million.

Standard Chartered PLC rose 0.4% to HK$186.90 after the British lender that earns at least three-quarters of its profit in Asia was upgraded to “buy” from “neutral” by UBS AG.

Suncorp Technologies Limited the maker and seller of telephone equipment surged 18.0% to HK$0.19.