Property curb fears hit stocks
Updated: 2012-08-21 06:38
By Bloomberg(HK Edition)
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Hong Kong stocks fell on Monday on concern the central government will increase property curbs after new-home prices gained in the largest number of cities in 14 months, and on a report the central bank has no intention of cutting lenders' reserve requirements.
The Hang Seng Index fell 0.1 percent to 20,104.27 at the close of trading after having lost 0.1 percent last week. The Hang Seng China Enterprises Index of mainland companies listed in Hong Kong dropped 0.4 percent to 9,794.86.
"China has weighed on property prices while leaving some wiggle room, which has led to a rise in prices," said Michiya Tomita, a Hong Kong-based fund manager at Mitsubishi UFJ Asset Management Co. "A key to the market this month will be earnings," he added.
The Hang Seng Index fell 7.3 percent from this year's high on February 29 amid concern Europe's spreading debt crisis will crimp global demand. Shares on the HIS trade at 10.6 times estimated earnings on average, compared with 9.5 for the Shanghai Composite Index and 13.7 for the Standard & Poor's 500 Index.
The Chinese mainland may expand a property tax trial and raise the "threshold" for home pre-sales if housing prices rebound too fast, Shanghai Securities News reported on Monday.
The mainland's new home prices climbed from a month earlier in 49 of 70 cities, the National Bureau of Statistics said on August 18 after interest-rate cuts and incentives for first-time buyers. That was the most since May 2011 and compared with rising prices in 25 cities in June. Property stocks led declines.
Stocks also fell on speculation the People's Bank of China has no intention of cutting banks' reserve requirements in the short term, as suggested by a cash injection last week, according to a commentary in the Financial News.
Trading volume on the Hang Seng Index was 25 percent below the 30-day average as European leaders plan a week of shuttle diplomacy to help defuse the region's debt crisis. Jean-Claude Juncker, Luxembourg's premier who heads the group of euro-area finance ministers, is expected in Athens on Wednesday to discuss Greek Prime Minister Antonis Samaras' request for a two-year extension of the country's fiscal adjustment program. Samaras travels to Berlin and Paris on August 24 and 25.
"One concern is the lack of volume," said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management (Asia) Ltd. "It's a phenomenon in most equity markets around the world. Perhaps, it shows a lack of conviction, a lack of participation by retail investors."
Futures on the Hang Seng Index fell 0.1 percent to 20,095.
(HK Edition 08/21/2012 page2)