Banks, Realtors Drop in China; Tighter Loans

Darlington Musarurwa
29 Oct, 2009
New York City

Stocks in China region declined on the worries that tighter lending rules will hurt the nascent recovery and property markets. Real estate developers and banks closed lower. PetroChina reported third quarter net fell 24%. Nine Dragons Paper plunged 11% on the plan to raise capital.

[R]6:00 AM New York, 6:00 PM Hong Kong – Stocks in China region declined on the worries that tighter lending rules will hurt the nascent recovery and property markets. Real estate developers and banks closed lower. PetroChina reported third quarter net fell 24%. Nine Dragons Paper plunged 11% on the plan to raise capital.[/R]

Hong Kong and China stocks declined led by financial stocks on concern the Peoples’ Bank of China will hike interest rates as the inflation gathers momentum and China said it plans to tighten rules on personal loans. Real estate developer and banks fell sharplyin Hong Kong and Shanghai.

Norway has abandoned its loose monetary policy stance, while Australia is expected to increase its base rate by 25 percentage points next week for the second time this year.

In Hong Kong trading Hang Seng Index dropped 2.3% or 496.59 to 21,264.99, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, fell 2.8% or 364.51 to 12,466.67. In Shanghai trading, CSI 300 Index plunged 2.5% or 82.28 to 3,247.05.

Daily turnover on main-board increased to HK$80.81 billion from HK$68.97 billion yesterday.

China Considers Tightening Rules on Personal Loans

China Banking Regulatory Commission is currently inviting input from the public on a draft plan on rules of personal loans. The mulled regulations are designed to ensure that the loans enter the “real economy.”

The CBRC has instructed lenders not to extend loans to individuals without full knowledge of their proposed usage.

According to the Commission, new personal loans in the first six months surged more than 50% or Rmb391 billion from a year earlier to Rmb650.8 billion.

In the first nine months, Chinese banks also lent Rmb8.7 trillion of new loans against a full year target of Rmb5 trillion.

HK Inflation to Remain Reined-In

Xinhua News Agency reported today that Hong Kong finance Chief John Tsang notes that inflation pressure will remain reined-in in the short to medium term.

Tsang says a drastic rise in consumer prices remains remote in the near term and forecasted that the Hong Kong economy will grow next year.

The HK government policy intends to maintain the local real estate market in a healthy and stable state.

Gainers & Losers

Financial stocks fell on fears China will increase its key rate. Bank of Communications edged down 5.4%. The lender was also downgraded by Citigroup the bank after reported a flat quarterly profit.

HSBC declined 1.2% and Bank of China fell 2.7%.

PetroChina plunged 4% to HK$9.55 after profit fell 23.5% in the three months ended September on high crude oil prices.

CNOOC tumbled 4.5% and Sinopec shed 1.3%.

China Coal Energy dropped 3.3% to HK$10.68 after it reported third quarter profit plunged 36% to Rmb1.41 billion.

Nine Dragons Paper Holdings Ltd. fell 11.5% to HK$10.85 after announcing it will sell HK$2.87 billion worth of new shares to its controlling shareholder.

But Geely Automobile edged up 2.1% after Ford Motor Co it was named a “preferred bidder” for Volvo.

Zijin Mining tumbled 4% after reporting a 15.1% increase in profit in the September quarter.

China State Construction Engineering Corp dropped 7.2%.

Property stocks fell on the worries that China may tighten personal loan rules. Glorious Property Holdings Ltd decreased 3.3% to HK$3.25 and China Resources Land fell 3.1% to HK$18.22. China Overseas Land & Investment Ltd declined 3.5% to HK$16.34.