Stocks in Shanghai, HK Diverge; Property Curbs

Chandrasekhar Atreya
30 Sep, 2010
New York City

Stocks in Shanghai gained as home builders and banks led gainers. Hong Kong stocks declined after Goldman Sachs sold stake in ICBC. China introduces new measures to curb property speculation. U.S. slaps tariff on China products and blamed unfair currency practices.

[R]5:00 PM Hong Kong, China – Stocks in Shanghai gained as home builders and banks led gainers. Hong Kong stocks declined after Goldman Sachs sold stake in ICBC. China introduces new measures to curb property speculation. U.S. slaps tariff on China products and blamed unfair currency practices.[/R]

Mainland China stocks rose powered by developers and banks after new rules barred banks from giving loans for third home buyers. Stocks in Hong Kong closed marginally lower led by banks after Goldman Sachs sold a stake in ICBC overshadowing rally in real estate developers.

The Hang Seng Index in Hong Kong dropped 0.09% or 20.50 points to close at 22,358.17. The CSI 300 Index in China climbed 2.11% or 60.76 to close at 2,935.57.

The benchmark index in Hong Kong increased 7.8% in September and added 2.2% for the year so far.

U.S. lawmakers overwhelmingly approved a bill that may impose tariff on products made in China for what they described as its grossly undervalued currency, blaming the weak yuan for killing U.S. jobs weeks before key elections.

The House of Representatives passed the proposed Currency Reform for Fair Trade Act legislation by 348-79 votes fueled by deep anger at the sour economy and joblessness near 10% ahead of the November elections.

The measure would essentially consider Beijing’s actions as a trade subsidy, and expand the powers of the U.S. Commerce Department by allowing it to slap retaliatory tariffs on Chinese goods.

China’s central bank said ahead of the above voting, that it will increase the flexibility of the yuan and improve the way it manages the exchange rate with reference to a basket of currencies of the country’s trading partners.

The People’s Bank of China said this in a summary of the third quarter meeting of its monetary policy committee.

The proposed anti-subsidy investigation by the U.S. against imports from China on the grounds of exchange rate violates the rules of the World Trade Organization, said Yao Jian, a spokesman of China’s Ministry of Commerce in Beijing today.

Mainland China is the world’s largest IPO market so far this year, as 257 companies raised $59.7 billion through initial public offerings during the nine months to September 2010.

Taking another step to clamp down property speculation, China on Wednesday announced a new set of policies to further tighten mortgage lending.

Banks have been ordered to stop giving mortgages to buyers of third or more homes and first home down payment requirement was increased to 30% from the current 20%, the State Council said in a statement on its Web site.

Transaction tax is reduced to half for buyers of non-luxury homes for use as sole residences. The tax cut was announced in a circular approved by the State Council and jointly issued Wednesday by finance, taxation and housing ministries.

Mainland China’s population of super rich grew by 31% in just one year to nearly 500,000 in 2009, the second-largest group of high net worth individuals in the Asia Pacific region according to the latest study by Merrill Lynch Global Wealth Management and Paris-based consulting firm Capgemini.

The combined wealth of Asia Pacific ‘high net worth individuals’ also surged 31% to $9.7 trillion in 2009, surpassing that of Europe’s wealth in 2009, according to the 2010 Asia Pacific Wealth Report released Tuesday.

The Shanghai-based Hurun Rich List showed that China may now have the world’s largest number of billionaires. A new list of China’s top five richest people said drinks billionaire Zong Qinghou, the founder of Hangzhou Wahaha Group, rose from the 12th place to first in its annual rankings.

Measures taken by the U.S. that effectively banned imports of Chinese cooked chicken broke international trade rules and caused injury to China’s economy, a World Trade Organization dispute panel said Wednesday.

The U.S. measures were found to be unscientific and discriminatory by the panel as reported in its 184 page verdict handed down Wednesday on a challenge by China.

China can realize its five-year goal to conserve energy by the end of the year but will find that its climate-change target for the next decade will be a tougher and costly act to follow, a senior official said Wednesday.

China has a target to cut energy intensity, the amount of energy required to produce one unit of gross domestic product, by a fifth in five years through 2010 as part of its 11th five year plan. The energy intensity use fell 15.6% by the end of 2009, but rose 0.09% in the first half of this year.

Xie Zhenhua, Deputy Chief of the National Development and Reform Commission said this goal is still achievable as China is spending 83.3 billion yuan in environmental and energy conservation projects this year and also closing down hundreds of inefficient plants. But he feels that considerable effort is needed to meet the 2020 target of slashing carbon intensity, emissions per unit of GDP, by 40% to 45% from the 2005 level.

The HSBC Purchasing Manager’s Index, a comprehensive gauge of industrial activities across the nation, rose to 52.9 in September, up from 51.9 in August.