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
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.