Equities decline on Wen's property comment
Updated: 2011-11-01 11:24
By Irene Shen (China Daily)
SHANGHAI - Stocks on the Chinese mainland fell for the first time in six days, narrowing the benchmark index's biggest monthly gain in a year, after Premier Wen Jiabao said the government should "firmly" maintain property curbs.
Anhui Conch Cement Co, China's biggest producer of the building material, lost 1.6 percent after the government said local authorities should strictly implement tight policies in the property industry in the coming months.
Huaxia Bank Co and Bank of Communications Co led a gauge of financial companies to its first drop in more than a week. Baoshan Iron & Steel Co, the biggest publicly traded steelmaker, slid the most in two weeks and China Railway Group Ltd dropped 1.9 percent after earnings for both companies slumped in the third quarter.
"It's too early to celebrate after the rally as the government is still keeping its control policies," said Tu Jun, a strategist at Shanghai Securities Co. "The market may be range-bound at current levels and the uncertainty over policy easing will lead to volatility."
The Shanghai Composite Index dropped 0.2 percent to 2468.25. The gauge advanced 6.7 percent last week, the biggest gain since the period ended Oct 15, 2010. The CSI 300 Index slid 0.5 percent to 2695.31.
A gauge tracking financial companies in the CSI 300 Index dropped 0.7 percent, paring this month's 8.4 percent jump, the most among 10 industry groups.
China will "firmly" maintain its property curbs and "fine tune" other economic policies at an appropriate time, according to a statement following a State Council meeting chaired by Wen.
Local authorities should continue to strictly implement the central government's real-estate policies in the coming months to let people see the results of the curbs, according to the statement on Oct 29. The government will "fine tune" its economic policies by "an appropriate degree and at an appropriate time", it said.
The government this year increased downpayment requirements and mortgage interest rates on some homes and imposed housing purchase restrictions in about 40 cities. The central bank has also raised interest rates three times in 2011 and ordered lenders to set aside a bigger portion of their deposits to curb inflation that's near a three-year high.
"It demonstrates to local governments and developers the central government's determination to tighten the property market," said Liu Li-Gang, a Hong Kong-based economist at Australia & New Zealand Banking Group Ltd. "With inflation still at a high level, it's unlikely the government will take a big step to loosen its policy, but only a partial easing."
China may loosen its lending standards as the "next logical step" after announcing selective policy-easing measures to boost the economy, according to China International Capital Corp.