Hong Kong, China shares pare gains on property curbs
Hong Kong and China shares gave up early gains on Monday, with the Chinese property sector weak after the southern city of Shenzhen was reported to be raising minimum down payment on second home purchases in an attempt to stem rising prices.
Lackluster midday volumes pointed to underlying caution at the start of a busy week, which includes US jobs data and more China data this Friday and the start of a key Communist Party policy-setting meeting starting on Saturday.
By midday, the Shanghai Composite Index and the CSI300 of the leading Shanghai and Shenzhen A-share listings were each down 0.1 per cent after starting the day higher.
The Hang Seng Index slipped 0.1 per cent to 23,218.5 points, while the China Enterprises Index of the top Chinese listings in Hong Kong inched up 0.2 per cent, off the day’s highs.
“It’s a slow start and people are cautious ahead of some key events later this week. All eyes are on China after all the talk of reform,” said Jackson Wong, Tanrich Securities’ vice-president for equity sales.
On Monday, Chinese property counters were put on the backfoot after the official China Securities Journal reported on Saturday that Shenzhen would raise minimum down payments on second home purchases from 60 to 70 per cent.
The mood was further soured by a front-page editorial in the same newspaper on Monday that referred to rising home prices as a “bubble” that poses a “danger” to the world’s second-largest economy, advocating that Beijing should combine property controls with land and tax policy reforms.
China Vanke fell 1.6 per cent in Shenzhen, while in Hong Kong, China Resources Land shed 2.2 per cent, while Country Garden sank 1.9 per cent.
The sector weakened on Monday, paring gains racked up late last week, after control measures announced by the Chinese president were taken to suggest that Beijing will stick with supply-side measures instead of demand-side ones.
Investors have been jittery on the sector despite its stellar quarterly earnings with home prices continuously rising ahead of a four-day third plenary meeting from Saturday, where major economic reforms are historically decided.
In Hong Kong, Chinese banking and mining counters were buoyed by a pledge from the mainland’s banking regulator to curb financial risks and to support any resultant merger and acquisition activity in Beijing’s drive to cut overcapacity.
Agricultural Bank of China rose 0.5 per cent, while China Shenhua Energy climbed 1.5 per cent.
There were also gains for Shunfeng Photovoltaic International Ltd, whose shares surged 16.5 per cent to a record high after it announced an agreement to buy the main unit of Suntech Power for US$492 million (HK$3.8 billion).
Fresh monthly China data is expected from Friday, including for money supply, loan growth, trade, inflation, urban investment, retail sales and industrial output.
Over the weekend, China’s official purchasing managers’ index (PMI) for the non-manufacturing sector expanded at the fastest pace in 13 months, rising to 56.3 in October from September’s 55.4.