China Stocks Fall; Home Prices Surge 8.6%

Bikram Pandey
10 Nov, 2010
New York City

Stocks in China region declined ahead of inflation data. Home prices in China increased in October at a slower pace but continue to attract speculative capital. October trade surplus increased 23% as exports rose faster than imports. China let the yuan appreciate 0.5% against the dollar.

[R]6:00 PM Hong Kong – Stocks in China region declined ahead of inflation data. Home prices in China increased in October at a slower pace but continue to attract speculative capital. October trade surplus increased 23% as exports rose faster than imports. China let the yuan appreciate 0.5% against the dollar.[/R]

China region stocks declined on the growing worries that banks are facing tighter regulations and an increase in foreign fund flows. Home prices rose at a slower pace in October but trade surplus in the month surged to the second largest monthly surplus.

China reported second largest monthly trade surplus in October as exports rose faster than imports.

Trade surplus increased to $27.1 billion and exports in the month increased 22.9% to $136 billion and imports soared 25.3% to $108.83 billion from a year ago according to the latest data released by the customs bureau.

Surplus in September was $16.88 billion and July surplus was the largest in the year at $28.73 billion.

Trade surplus in the first ten months declined 6.7% to 147.77 billion.

China also let the yuan rise 0.5% to 6.637 against the dollar and also tightened the bank reserves for the large eleven banks. The yuan has gained nearly 3% in the year against the dollar.

Bank of China Ltd, Agriculture Bank of China Ltd, Industrial and Commercial Bank of China Ltd and China Construction Bank Corp were among the banks that were asked to tighten the reserve ration by 35 to 50 basis points according to the sources at various banks.

Property prices in China across 70 largest metros increased 8.6% in October. The increase was slower than the gain of 9.1% in September. Home prices increased 0.2% in October after rising at 0.5% in September.

The Shanghai Composite Index declined 0.6% or 19.64 to 3,115.36 and the CSI 300 index fell 0.7% to 3,499.11.

Banks declined on the worries that tighter reserve ratios will lower capital available for loans. ICBC declined 0.8% and China Merchants Bank dropped .37% to 14.64 yuan. Bank of Communications declined 2.1%.

China Vanke Co declined 3.6% to 9.15 yuan and Poly Real Estate Group dropped 3.2%.

Ahead of inflation data tomorrow, stocks of liquor and drinks makers gained on the expectations that the companies will be able to pass higher costs to consumers.

Luzhou Laojiao Co increased 5.3% and wuliangye Yibin increased 4.1% to 38.50 yuan.