Bloomberg News

China’s Stocks Post Biggest Weekly Loss in 20 Months on Property

February 22, 2013

Shanghai Composite Heads for Weekly Loss; Banks, Autos Decline

A customer watches share prices on an electronics stock board at a security firm in Shanghai. The Shanghai index has fallen about 5 percent after gaining as much as 24 percent during a bull-market rally that started on Dec. 3. Photographer: Tomohiro Ohsumi/Bloomberg

China’s stocks fell, dragging the benchmark index to its steepest weekly loss in 20 months, as higher home prices boosted concern the government will adopt tighter policies to prevent asset bubbles.

SAIC Motor Corp., the biggest automaker, dropped 3.2 percent, adding to a five-day loss of 10 percent. China Construction Bank Corp., the largest mortgage lender, led declines for financial companies this week. A gauge of Shanghai property developers posted its worst weekly loss since July. New home prices rose in most cities the government tracked in January, government data showed today.

The Shanghai Composite Index (SHCOMP) slid 0.5 percent to 2,314.16 at the close, adding to a 4.9 percent slump this week, the most since May 2011. The CSI 300 Index (SHSZ300) fell 0.5 percent to 2,596.60. The Hang Seng China Enterprises Index (HSCEI) lost 0.7 percent. The Bloomberg China-US Equity Index (CH55BN) slipped 1.3 percent yesterday.

“The stock market will remain weak and fluctuate for a while after a big rally last month,” said Zhang Gang, a strategist at Central China Securities Holdings Co. in Shanghai. “There’s still a lot of concern about more tightening measures in the property industry.”

The Shanghai index has fallen about 6 percent after gaining as much as 24 percent during a bull-market rally that started on Dec. 3. Stocks declined amid concern government policies to curb gains in property prices may damp demand for autos, bank loans and construction materials.

The Shanghai measure’s valuation of 9.62 times projected 12-month earnings is the lowest in a month. The index is up 2 percent for 2013.

Property Prices

Trading volumes in the Shanghai index were 27 percent below the 30-day average today. Chinese stock accounts containing funds fell by about 287,000 to 54.4 million in week to Feb. 8, the biggest drop since the week to Oct. 15, 2010, according to regulatory data compiled by Bloomberg. Investors opened 83,775 accounts to trade stocks, down from the previous week’s 123,161.

New home prices climbed in 53 of the 70 cities the government tracks, compared with 54 in December, according to data from the National Bureau of Statistics today. Prices fell in 10 cities. Home prices rose in 53 cities from a year earlier, compared with 40 cities in December.

Prices “are actually going up again, especially in major cities and some second-tier cities,” Nicole Wong, a property analyst at CLSA Asia-Pacific Markets told Bloomberg Television in Hong Kong today. “We’ll have some more tightening, but this time around the tightening will be quite selective,” targeting a handful of overheating cities, she said.

Automakers Drop

The Shanghai property added less than 0.1 percent today and was down 6 percent for the week. The measure trades at 10.5 times reported profit, the lowest level in about a month. Poly Real Estate Group Co., the biggest developer after China Vanke Co., climbed 0.8 percent to 12.40 yuan, narrowing five-day losses to 4.8 percent. Vanke, up 0.1 percent today, fell 5.9 percent this week.

“Although property stocks are doing OK today, it’s only because they tumbled too much this week,” said Zhang. “There’s still a lot of concerns about more tightening measures in the property industry.”

China Construction Bank, the second-biggest lender, slid 1.1 percent for a five-day loss of 5.7 percent. Its mortgage loans accounted for 20 percent of the total loan portfolio at the end of June, according to earnings reports. Industrial & Commercial Bank of China Ltd., the second largest mortgage lender with a ratio about 14 percent, slumped 1 percent today.

Automakers dragged down a gauge of consumer-discretionary stocks in the CSI 300. The measure slid 1.2 percent, adding to a 6 percent loss for the week. FAW Car Co. lost 4.1 percent to 8.30 yuan today. SAIC Motor fell 3.2 percent to 16.59 yuan.

Staples Gain

Consumer staples rose the most among 10 industry gauges on the CSI 300 with a 1.7 percent gain. Kweichow Moutai, the biggest maker of baijou liquor, advanced 3.1 percent to 185.59 yuan. Wuliangye Yibin Co., the second-largest maker, jumped 2.6 percent to 25.77 yuan. The consumer gauge climbed 12 percent through yesterday since Dec. 3, compared with a 24 percent gain for the CSI 300.

“Liquor makers are seeing a technical rebound after lagging behind in the recent market rally,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai, by phone today. “The fundamentals of liquor industry still remain bearish with prices of high-end liquor falling recently.”

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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