Top Biz News

Equities decline on policy change woes

(China Daily/Agencies)
Updated: 2010-01-05 08:06

Property shares led declines yesterday as the Shanghai municipal government tightened tax and mortgage rules.[China Daily]

China's stocks fell on the first trading day of the year as Shanghai tightened tax and mortgage rules, bolstering prospects the government will step up measures to curb property speculation.

The Shanghai Composite Index fell 33.38, or 1.02 percent, to close at 3243.76, snapping a four-day rally. The gauge surged 80 percent last year after government spending and bank lending helped revive growth in the world's third-largest economy.

The CSI 300 Index dropped 1.13 percent to 3535.23.

"There's uncertainty over the government's policy on the property industry," said Zhao Zifeng, who helps oversee about $10.2 billion at China International Fund Management Co in Shanghai.

"For the broader market, the situation is bright as listed companies are expected to achieve growth for a second straight year amid the economic recovery."

Poly Real Estate fell 2.2 percent to 21.9 yuan ($3.21). China Vanke Co, the nation's biggest listed property developer, lost 1.9 percent to 10.6 yuan. Gemdale Corp, the fourth largest, retreated 2.7 percent to 13.51 yuan.

Home buyers must prove they are first-time purchasers before they can benefit from a reduced tax on property transactions, the Shanghai municipal government said in a statement on its website on Dec 31.

Separately, Guangzhou's government announced tougher penalties for developers hoarding land, the South China Morning Post said yesterday.

"These policy changes will likely raise the transaction and funding costs of most speculative transactions," Ma Jun, chief China economist at Deutsche Bank AG in Hong Kong, said in a note. "Other major cities such as Beijing, Guangzhou, Shenzhen and Hangzhou will likely follow suit."

SAIC Motor Corp led gains by automakers after the nation's manufacturing expanded by the most in five years in December. SAIC gained 3.2 percent to 26.96 yuan.

Chongqing Chang'an Automobile Co, the Chinese partner of Ford Motor Co and Mazda Motor Corp, climbed 3.4 percent to 14.5 yuan.

A purchasing managers' index rose to a seasonally adjusted 56.1, HSBC Holdings Plc and Markit Economics said yesterday. The measure is based on a survey of more than 400 manufacturing companies.

The PMI number was the highest since April 2004, the first month of the HSBC survey. The official PMI, which was released on Jan 1 and has a different methodology, showed the biggest expansion in 20 months.

"We remain optimistic in 2010," said Sun Chao, an analyst at CITIC Securities Co in Shanghai. "We continue to see improvement in the economic front and that will be reflected in corporate earnings."

Hang Seng dips

Hong Kong shares closed down 0.23 percent yesterday, its first trading day for 2010, as mainland banks fell on worries over fund-raising plans and policy changes.

The benchmark Hang Seng Index ended down 49.22 points at 21823.28. The China Enterprises Index of top locally listed mainland stocks fell 0.34 percent to 12750.55.

The mainland's top lender Industrial and Commercial Bank of China fell 1.09 percent to HK$6.37 (82 cents). China Construction Bank lost 1.2 percent to HK$6.59.