Chinese equities fell to a three- month low in New York, as speculation property curbs will be tightened sank SouFun Holdings Ltd. (SFUN:US) and Suntech Power Holdings Co. tumbled on prospects the government won’t offer a bailout.
The Bloomberg China-US Equity Index of the most-traded Chinese companies in the U.S. slid 1 percent to 92.09 yesterday, the lowest close since Dec. 4. SouFun, owner of China’s biggest real estate information website, slumped to the lowest level in almost three months, as E-House China Holdings Ltd. slid the most in five weeks. Suntech (STP:US), a solar-panel maker that announced a forbearance agreement this week for $541 million of debt, sank 24 percent, leading declines on the gauge.
Property stocks retreated in China yesterday after Sina.com said Shenzhen housing authorities had been told to ensure zero new home price increases, a report the city’s Urban Planning Land and Resources Commission later denied. Premier Wen Jiabao told cities with “excessively fast” price gains this month to step up limits on home purchases through measures such as higher down-payment requirements for second mortgages.
“The biggest concern in China is property and the volatility in that sector given what happens with the administrative measures,” Clement Miller, an investment strategist at Wilmington Trust Investment Advisors Inc., which manages $70 billion in assets, including Chinese equities, said by in a phone interview from Baltimore. “The property market curbs are not going to help the equities. Those are going to constrain earnings growth expectations and valuations.”
The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund (FXI:US) in the U.S., slid 1.7 percent to $37.34 in New York, dropping for a third day. The Standard & Poor’s 500 Index added 0.1 percent to 1,554.52. Shares on the China-US gauge traded at 12.9 times estimated profits, the cheapest level this year, while the valuation for the Hang Seng China Enterprises Index dropped to a three-month low of 8.1.
SouFun, based in Beijing, fell 4.2 percent in its fourth day of declines to $23.48, the lowest close since Dec. 19. E- House, a Shanghai-based real estate agent, slipped 3.9 percent to $4.70, sliding the most since Feb. 4.
Shenzhen housing authorities said in a statement yesterday they haven’t introduced a new round of housing curbs in the southern city, denying an earlier report on news portal Sina.com. The city has continued to implement the central government’s policies to ensure prices don’t rise too quickly, they said.
A gauge tracking property shares on the Shanghai Composite Index fell 2.5 percent to the lowest in three months yesterday, posting the biggest decline among the five industry groups on the benchmark. China’s consumer prices climbed 3.2 percent in February from a year earlier, the fastest pace in 10 months.
China should be on “high alert” over inflation after February’s price gains exceeded forecasts, central bank Governor Zhou Xiaochuan said yesterday at a press conference during the annual gathering of the National People’s Congress. The nation’s monetary-policy stance is “no longer relaxed” and is “relatively neutral”, Zhou said.
Suntech, the biggest solar-panel maker in 2011, plunged to 83 cents, with the stock trading below $1 for the first time in three months. LDK Solar Co., the second-biggest wafer maker globally, tumbled 12 percent to $1.39, sinking the most since October.
Suntech may be required to pay bondholders who haven’t agreed to a forbearance agreement which allowed a two-month delay in payments on its $541 million in convertible debt due March 17. About 60 percent of the note holders have agreed to wait until May 15 before exercising their rights, Wuxi, Jiangsu- based Suntech said in a March 11 statement.
China’s government “won’t intervene and shouldn’t” rescue Suntech from its creditors, as officials in Beijing want to pare excess manufacturing capacity, said Li Junfeng, director of the climate-change strategic research division at the government’s National Development and Reform Commission.
Suntech should “not rely on government assistance,” said Meng Xiangan, vice chairman of the China Renewable Energy Society, a liaison between the industry and the state.
Hollysys Automation Technologies Ltd. (HOLI:US) fell for the first time in five days, losing 9.6 percent to $12.62. The Beijing- based company said March 7 it agreed to acquire Bond Corp. in a $73 million deal. Qihoo 360 Technology Co. (QIHU:US), an Internet software developer, also based in Beijing, slid 5.7 percent to $29.56, the lowest price since Dec. 28.
Renren Inc. (RENN:US), the Beijing-based owner of a real-name social media site, climbed 4.6 percent to $3.21. The shares had the biggest advance on the China-US gauge.
The Hang Seng China Enterprises Index fell 2.3 percent to a three-month low of 11,037.41 yesterday, while the Shanghai Composite Index of domestic Chinese shares slipped 1 percent to 2,263.97, sinking for a fifth day in the longest stretch of declines since November.
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