China Property Curbs to Stay; Stocks Decline

Mayank Mehta, Chandrasekhar Atreya and Sanjay Barot
13 Jul, 2010
New York City

Stocks in China region fell after the government confirmed it will maintain property curbs besides moderating steel production in the country. Alcoa expects China to be the biggest consumer of its aluminum in the year. Zijin closes down its copper smelter after its waste water polluted Ting River.

[R]5:00 PM Hong Kong, China – Stocks in China region fell after the government confirmed it will maintain property curbs besides moderating steel production in the country. Alcoa Inc said it expects China to be the biggest consumer of its aluminum in the year. Zijin has been forced to close down its copper smelter after its acidic waste water polluted Ting River.[/R]

Stocks in China dropped the most in two weeks after government confirmed that it will continue its curbs on property prices. Stocks in Hong Kong also dropped but marginally after increasing once during the day.

Hang Seng Index in Hong Kong declined 0.18% or 36.37 to close at 20,431.06. The CSI 300 Index in China dropped 1.54% or 42.29 to close at 2,711.91.

The Ministry of Housing and Urban-Rural Development reiterated, in response to media reports that it will continue to maintain curbs on speculative purchases and increase market supply. China’s banking regulator also confirmed that it had made no changes to policies on home loans and called on commercial banks to strictly enforce home loan rules, according to its statement made yesterday.

Demand for iron and steel may drop in China after a plan to moderate steel production was announced by the government today.

China will push for mergers and acquisitions within the steel industry to curb any rapid increase in production. The ministry will further regulate iron-ore imports, said Li Yizhong, head of the Ministry of Industry and Information Technology, in a speech posted on the ministry’s Web site today.

Citing end-market requirements, Pittsburgh-based Alcoa Inc increased its outlook for 2010 global aluminum consumption on Monday with China, not surprisingly, expected to grab the lion’s share of global supply.

“China is obviously an important market, but a very important market for Alcoa. We have sales of around $1 billion in China. If you look at the last five years, we’ve had average growth rates of around 29% in China,” Chairman and CEO Klaus Kleinfeld said on Monday while speaking to analysts on a conference call.

PetroChina Co, said it will advise its partners very soon of the Chinese government’s decision on whether to approve the takeover of Australia’s Arrow Energy Ltd, with Royal Dutch Plc. This was confirmed by PetroChina’s spokesman Mao Zefeng by phone from Jong Kong today.

President Hu Jintao said he hopes the Economic Cooperation Framework Agreement trade pact with Taiwan will come into effect as soon as possible, the official Xinhua news agency reported yesterday.

Zijin Mining Group, China’s largest gold producer, was forced to shut a copper smelter following the leakage of acidic waste water at Zijinshan mine into the Ting River in Fujian province.

“The plant, which produces 12,800 tons of copper a year, will only be reopened after checks by local environmental authorities. The company will likely have to pay a penalty and also compensate local fisheries after the river was polluted,” said spokesman Zhao Jugang, today in a telephonic interview.