China stock market

Shanghai stock slide enters fourth day, as developers tumble on property tax concern

The Shanghai Composite Index fell 0.4 per cent on Wednesday, wrapping up a four-day, 1.8 per cent decline

PUBLISHED : Wednesday, 18 July, 2018, 9:37pm
UPDATED : Wednesday, 18 July, 2018, 10:34pm

China’s stocks dropped for a fourth day on Wednesday, as concerns mounted that corporate earnings growth may have slowed in the second quarter and the government will speed up the pace of levying property taxes on more cities to rein in housing prices.

The Shanghai Composite Index slid 0.4 per cent, wrapping up a four-day, 1.8 per cent decline. The ChiNext gauge of smaller stocks fell 0.9 per cent as Citic Securities estimated earnings decreases in the companies in the three months through June 30. Hong Kong’s Hang Seng Index slipped for a second day with a 0.2 per cent drop. China’s offshore yuan traded in Hong Kong slid to its lowest level in a year.

Further adding to the turmoil on stocks was the latest comment from the spokesman for China’s statistics bureau that policymakers will introduce the property tax at a faster pace amid rising home prices in some cities. Mainland’s equities have been plagued this year by an intensifying trade war with the US and a drive to reduce debt among big companies.

“The factors that have been holding back stocks are still there and no new investors are willing to move in now,” said Dai Ming, a fund manager at Hengsheng Asset Management in Shanghai. “The weak sentiment will probably linger.”

Poly Real Estate Group led the declines among property developers on Wednesday, with the share dropping 3.3 per cent to 10.57 yuan. Risesun Real Estate Development lost 2.5 per cent to 7.50 yuan and China Vanke slid 2.2 per cent to 22.47 yuan.

Beijing TRS Information Technology and Shenzhen Increase Technology Shares were among companies that tumbled on the ChiNext board. Citic Securities, China’s biggest publicly traded brokerage, said in a research note that the ChiNext-listed companies probably posted a 2.9 per cent decrease in second-quarter earnings, compared with 31 per cent growth for the previous three-month period. Beijing TRS slumped 10 per cent to 12.86 yuan and Shenzhen Increases also sank by the same magnitude to 37.91 yuan.

In Hong Kong, the Hang Seng Index slid 64.26 points to 28,117.42. The Hang Seng China Enterprises Index, or the H-share gauge, slipped 0.1 per cent.

Property and financial stocks were the worst performers on the Hang Seng Index, with sub-indexes of the two sectors both shedding 0.3 per cent. Hang Lung Properties retreated 2.1 per cent to HK$15.58 and Sino Land lost 1.1 per cent to HK$12.50. Hang Seng Bank sank 0.9 per cent to HK$199.30 and HSBC Holdings dropped 0.8 per cent to HK$72.60.

Smartphone maker Xiaomi advanced 3.1 per cent to HK$21.55, taking its gain from the initial public offering price to 27 per cent. Hong Kong Exchanges and Clearing said it reached an agreement with the Shanghai and Shenzhen bourses by setting up a joint working group to lay out rules on trading of the companies with weighted-voting rights in the exchange link programmes.

“The mainland’s regulators don’t want local investors to buy Xiaomi’s shares at a relatively high price,” said Dai. “And also they are concerned that allowing mainland investors to trade the stock in Hong Kong will cause problems to the Chinese depositary receipts plan.”