China stocks slip on worries about fresh property curbs
SHANGHAI: China stocks dipped yesterday as fears of fresh property cooling measures and broader monetary policy tightening hit shares of developers.
The Beijing municipal government announced new steps to rein in its booming housing market after the market close on Friday.
Data on Saturday suggested the impact of earlier property cooling steps by many cities may have been short-lived. China’s home prices picked up speed again in February after slowing in the previous four months, while sales have surged.
China’s blue-chip CSI300 index fell about 0.4 per cent in early afternoon trade to 3,433.53 points, while the Shanghai Composite Index slipped about 0.2 per cent to 3,231.34.
An index tracking the property sector tumbled nearly 2 per cent after more cities imposed fresh property restrictions over the weekend.
But Hong Kong stocks edged higher as energy shares jumped, led by a surge in China Shenhua Energy on the back of stellar profit growth.
Investors in China are being torn between recent data showing a resilient economy and fears that expected policy tightening, while gradual, will eventually lead to higher borrowing costs and stunt business activity.
Last week, China’s’ central bank raised short-term interest rates for the third time in as many months in the immediate wake of the US rate hike.
Over the past week, a number of local governments have stepped up restrictions on property investment, and the central government vowed over the weekend to control bank lending to the property sector.
“The market is concerned about two things: whether the economic recovery is sustainable, and the reality of tighter liquidity,” Galaxy Securities said in its latest strategy report.
The brokerage added that upbeat economic data offers ‘trading opportunities’ for investors, but warned investors that the recovery may fade in the second half, when tighter liquidity will also add pressure to the market.
The view was echoed by Gao Ting, head of China strategy at UBS Securities, who wrote: “As improved economic fundamentals allow the PBOC more room to manoeuvre, we think monetary policy will remain in tightening mode for a longer period. — Reuters