Markets

Developers, commodity firms lead slump in stocks

By Chua Kong Ho (China Daily)
Updated: 2010-06-11 09:48

Bear market may continue on government tightening measures

SHANGHAI - Mainland stocks fell for the first time in three days, led by developers and commodity producers, on concern the government will step up tightening measures after property prices rose at the second-fastest pace on record.

An investor watches share prices at a brokerage in Haikou, Hainan province. [SHI YAN / FOR CHINA DAILY]

China Vanke Co paced declines among developers after housing prices advanced 12.4 percent in May. Jiangxi Copper Co led miners lower as copper, aluminum and zinc dropped. Baoshan Iron & Steel Co retreated 1.9 percent after Citigroup Inc lowered its price estimate on the shares.

"Unless there is a double dip in the global economy, the government is likely to maintain a tight policy on the property industry," said Christina Chung, senior portfolio manager at RCM, which oversees $146 billion in assets worldwide. "The correction in property stocks may take a longer time to play out."

Related readings:  Chinese stocks fall on tightening policy concern - June 10  Hong Kong stocks close 0.06% higher - June 10  Stocks rise on surging exports - June 9  China Vanke sales drop in May on property tightening moves

The Shanghai Composite Index fell 21.29, or 0.8 percent, to close at 2,562.58. The CSI 300 Index declined 1.2 percent to 2,750.02.

China Vanke lost 2.1 percent to 7.15 yuan ($1.05). Gemdale Corp slid 3.3 percent to 6.76 yuan, paring Wednesday's 5.9 percent advance. A measure of property stocks fell 1.7 percent on the Shanghai Composite on Thursday, the biggest drop among the five industry groups, and capping a 29 percent slump this year.

Commercial and residential property prices in 70 cities home prices rose 12.4 percent in May from a year earlier, the statistics bureau said on Thursday. That was down from a record 12.8 percent in April. Sales value fell 25 percent last month from April.