Elevated Home Prices in Shanghai; Hang Seng Surged 1.5%

Chandrasekhar Atreya
29 Dec, 2010
New York City

Hong Kong

[R]5:00 PM Hong Kong, China – Hong Kong’s benchmark index surged more than 1.5% while indexes in China rose less than 0.7%. Home prices in Shanghai continue to rise in December. China increases sales tax on smaller cars as the economy avoids the global markets crisis.[/R]

China stocks rose for the first time in six days led by drug makers and retailers and Hong Kong indexes followed. Resource stocks declined despite gold topping $1,400 an ounce and silver reached a new record.

The Shanghai Composite Index rose 0.68% or 18.54 to close at 2,751.53 and the CSI 300 Index rose 0.55% or 16.90 to close at 3,061.83.

The Hang Seng Index in Hong Kong surged 1.54% or 347.57 to close at 22,969.30.

The average price of new homes in Shanghai surged to a seven-month high of 24,476 yuan per square meter last week as government struggles to rein the price surge.

The new homes, excluding budget homes and houses for relocated families fetched an average price of 24,476 yuan per square meter for the week ending December 26 and highest since May 10, Shanghai Uwin Real Estate Information Service Co said on Tuesday.

The purchase tax for vehicles with engines smaller than 1.6 liters will be increased to 10% from January 1, 2011, the Ministry of Finance said on its Web site on Tuesday.

The government halved the sales tax for engines under 1.6 liters to 5% in 2009 and adjusted the preferential tax rate to 7.5% in 2010. A vehicle costing 80,000 yuan will now incur additional 2,000 yuan tax.

China cut its rare earth quotas for 2011 by 11%, prompting worries that more cuts may be planned in the future.

The government allotted 14,446 tons of rare earth to be split between 312 companies compared to 16,304 tons in the current year, the Ministry of Commerce said in a statement.

China revised its capital and financial account surplus up to $15.2 billion in the third quarter, the country’s top foreign exchange regulator said on Tuesday.

The State Administration of Foreign Exchange revised the surplus by almost $10 billion from a $5.7 billion it reported in November, the regulator said on its Web site without assigning any reason for the difference.

Beijing-based China National Chemical Corp agreed to buy a controlling stake in Tel Aviv-based Makhteshim-Agan Industries Ltd for $2.4 billion. The Chinese company agreed to take 7% of the stake from Koor Industries Ltd and also buy all publicly traded stock of the target to bring its total stake to 60%, Makhteshim said on Tuesday.

High net worth individuals on the mainland are expected to increase 16% this as the booming capital and property markets lift holdings of rich, according to a wealth report. The report counts high net worth individuals with at least 10 million yuan in investable assets, which excludes primary residences and assets of poor quality.

The mainland will likely have 383,000 individuals of high net worth this year, compared to 331,000 in 2009, according to the China Private Wealth Report 2010 released on Tuesday by Forbes China in association with China Construction Bank.

Taiwan’s economy is expected to expand 4.5% in 2011 on the back of its improving relations with mainland China.

Stock Movers

Shanghai Bailian Group Co, the listed unit of China’s largest retailer, surged 3.4% 15.05 yuan. Suning Appliance Co, another retailer, also rose 2.3% to close at 12.90 yuan.

Yunnan Baiyao gained 1.5% to 58.94 yuan while Tianjin Tasly Pharmaceutical Co gained 1.8% to 38.15 yuan.

Leading the energy stocks decline was Yanzhou Coal Mining Co which fell 1.7% to 26.81 yuan.

Jiangxi Copper dropped 1.5% to 40.56 yuan.