Money

Stocks decline for second day

By Zhang Shidong and Irene Shen (China Daily)
Updated: 2010-12-24 10:09

SHANGHAI - China's stocks fell for a second day as the government stepped up scrutiny of real estate investments and on concerns it may become more expensive for smaller companies to borrow money after a gauge of lending costs jumped.

China Vanke Co dropped 1.78 percent on Thursday, leading losses for property developers, after the Ministry of Commerce ordered local authorities to halt the approval of some foreign property investments to curb speculative buying. The seven-day repurchase rate, which measures lending costs between banks, jumped to the highest level since October 2007.

"Uncertainty over further controls is ruling the market," said Deng Changrong, a strategist at Huaxi Securities Co in Shenzhen. "As the market lacks liquidity at the moment, there's no support for a strong rebound."

The Shanghai Composite Index lost 0.79 percent falling to 2855.22 as of 3 pm on Thursday. The CSI 300 Index fell 0.83 percent to 3188.61. The CSI Smallcap 500 Index, with an average company market cap of 7.1 billion yuan ($1.07), slid 2 percent to the lowest since Dec 10.

The Shanghai Composite, the worst performer among major Asian benchmarks this year, has dropped 13 percent this year on concern that monetary tightening will curb economic growth.

A gauge of property companies in the Shanghai Composite dropped 0.7 percent. China will bar overseas companies from profiting by the purchase or sale of properties already completed or under construction in the nation, the Ministry of Commerce said in a statement. The ministry will strengthen review of property projects with foreign-currency inflows, according to a Nov 22 statement that was posted on its website on Wednesday.

Related readings:  Chinese shares close lower Thursday  Equities head south on fuel price increase  Housing price data reform to take effect  Real estate should not be pillar industry

Home prices in 70 Chinese cities climbed 7.7 percent in November from a year earlier, even after the government raised borrowing costs for the first time in three years, suspended mortgages for third-home purchases and pledged to introduce a property tax. Sales volume jumped 15 percent.

Yunnan Green-Land Biological Technology Co slumped by the 10 percent daily limit to 34.32 yuan after the company said 43.3 million shares held by controlling shareholder He Xuekui have been frozen by the public security department.

SAIC Motor Corp, China's largest automaker by market value, declined 1.6 percent to 16 yuan. Beiqi Foton Motor Co dropped 2.03 percent to 26.06 yuan.

Industrial Bank Co advanced 1.74 percent to 24.60 yuan. Agricultural Bank of China Ltd rose 0.38 percent to 2.63 yuan.

Aluminum Corp of China led gains for metal producers, climbing 1.73 percent to 10.59 yuan.

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