China's stocks plunged, driving the benchmark index down the most in almost eight months, on concern a government crackdown on the property market will increase bad loans and damp consumer spending.
A gauge tracking Chinese real-estate stocks tumbled 6 percent to a one-year low, led by China Vanke Co and Poly Real Estate Group Co, after the State Council told banks to stop loans for third-home purchases. Industrial & Commercial Bank of China Ltd slid 4.7 percent, the most since Oct 2008. Anhui Conch Cement Co led losses by construction material companies.
"The market is worried about the impact of government measures to tame property price increases," said Xu Lirong, who oversees about $2.6 billion at Franklin Templeton Sealand Fund Management Co in Shanghai. "I think more measures will be introduced."
The Shanghai Composite Index slumped 126.14, or 4 percent, to 3,004.16 at 2:32 pm, the biggest decline since Aug 31. The gauge is the world's third worst-performing stock market this year, losing 8.3 percent, as the government unwound monetary stimulus to avert asset-price bubbles after banks extended record credit last year.
Stocks across the Asian region declined, dragging the MSCI Asia Pacific Index down by the most in two months, on concern a US suit against Goldman Sachs Group Inc signals increasing regulatory scrutiny on financial companies.
The CSI 300 Index retreated 4.3 percent to 3,213.45, with six of the 10 industry groups declining more than 4 percent. All four contracts on CSI 300 fell on the China Financial Futures Exchange.
Vanke, the nation's biggest property developer, slumped 6.9 percent to 8.42 yuan, the most since Aug 31. Poly Real Estate declined 8 percent to 17.16 yuan, set for its lowest close in a year. The Se Shang Property Index slid 6 percent, the biggest drop since Aug 31 and leading declines among the Shanghai Composite's five industry groups.
China told banks to stop loans for third-home purchases in cities with excessive property price gains and suspend lending to non-residents without tax returns or proof of social security contributions in that city, according to a statement by the State Council on April 17. Local governments may also limit the number of units that can be bought, according to the statement.
"These are the most draconian measures on the property market in history," Jun Ma, Deutsche Bank AG's Greater China chief economist, wrote in a note to clients today. Chinese press reports point to "panic selling" by investors who own more than one home in Shanghai, Beijing and Shenzhen, he said.