China Worries Home Price Bubble; Developers Fall

Darlington Musarurwa
15 Dec, 2009
New York City

Property developers in China and Hong Kong declined after the regulators and government announce more measures to control the asset bubble in the sector. China plans to offer more low cost housing and control access to the lenders.

[R]6:00AM New York, 6:00PM Hong Kong – Property developers in China and Hong Kong declined after the regulators and government announce more measures to control the asset bubble in the sector. China plans to offer more low cost housing and control access to the lenders.[/R]

Stocks in China and Hong Kong fell on lingering worries Beijing will take additional measures to curb rising property prices after China State Council announced yesterday that soaring house prices needs to be monitored. The government plans to increase the supply of low cost housing.

Chinese regulators say that the government will make use of land use policies and taxation to try and cool rising property prices.

In Hong Kong trading Hang Seng Index fell 1.2% or 271.83 to 21,813.92, and the China Enterprises Index of Hong Kong listed mainland shares, or H shares, dropped 1.4% or 182.35 to 12,866.99. In Shanghai trading, CSI 300 Index fell 0.8% or 29.41 to 3,583.34.

Daily turnover on main-board dropped to HK$68.4 billion from HK$70.01 billion yesterday.

China to Monitor Realty Sector

China Daily reported that China State Council said yesterday the government is discussing additional measures and policies to safeguard “the healthy development” of the country’s real estate sector.

According to an executive meeting of the State Council, soaring house prices need a closer attention. China plans to increase supply of smaller houses at medium and low prices. Beijing plans to provide additional homes to 15.4 million poor by 2012.

Statistics from authorities in China indicate that an estimated 10 million households are still living in shanty towns in cities across the country.

Local governments have been mandated to increase spending in rebuilding the poorly-constructed houses.

Gainers & Losers

Realty stocks fell in Hong Kong on fears China will introduce more measures to cool rising property prices. China Overseas Land decreased 5.9% to HK$17.26 and Shimao Property declined 5.3% to HK$15.72.

Financial stocks fell. China Construction Bank dropped 2.2% to HK$6.70, Industrial and Commercial Bank of China declined 1.4% to HK$6.38, and Bank of China slipped 2.6% to HK$4.16.

Technology firm Alibaba.com advanced 1.8% to HK$18.12 after its chief executive said he was confident the company''s 2010 profit will exceed the earnings of the current year as the activities pick up.

PCD Stores surged 31% above its IPO price of HK$1.95.

Bank of China dropped 2.1% to Rmb4.20.

In Shanghai, realty stocks dropped on the worries that further tightening from the government will crimp the earnings in the sector.

China Vanke decreased 3.4% to Rmb11.39 and Poly Real Estate Group plunged 3.4% to Rmb23.75. Greentown China Holdings Ltd declined 6.6% to HK$13.80 and Shimao Property Holdings Ltd based in Hong Kong and home builder in the mainland declined 5.5% to HK$15.69.

Energy stocks fell. Sinocorp plunged 0.4% to Rmb13.64 and PetroChina shed 1.6% to Rmb13.76.

China Merchant Securities decreased 1.3% to Rmb 30.81.

Yunnan Chihong Zinc and Germanium climbed 3.5% to Rmb28.74 after announcing it plans to invest C$100 million into a joint venture with Selwyn Resources Ltd to develop a lead and zinc project in Canada.