China markets pull back again on renewed talk of tightening lending
China markets dropped today led by banks as speculation continued that Beijing will take steps to rein in liquidity.
The benchmark Hang Seng Index finished 1.5 percent lower. The China Enterprises Index, which represents top Hong Kong listed mainland Chinese stocks, was down 2.1 percent.
The Shanghai Composite Index slipped 1.24 percent, ending lower for the first time since last Wednesday's 5 percent sell-off. Winners outnumbered losers by 480 to 450, turnover dropped to RMB240.3bn from yesterday's RMB250.4bn.
Taiwan's Taiex index slid 1.6 percent.
The Securities Times reported that the China Banking Regulatory Commission may ask some smaller banks to raise their capital adequacy ratio to at least 12 percent from the current requirement of 8 percent. There was also talk of possible quality inspections of loan books at banks and of a further tightening targeting specifically at the property loans.
Bank of China (SH:601988, HK:3988) fell 1.1 percent in Shanghai and 3.6 percent in Hong Kong. China Construction Bank (HK:0939, SH:600939) fell 2.9 percent in Hong Kong and 1.1 percent in Shanghai. China CITIC Bank (SH:601998, HK:0998) dropped 3.5 percent in Hong Kong but rose 2.5 percent in Shanghai.
Insurers also took a hit. China Life Insurance Co Ltd, China's largest life insurer, dropped 1.25 percent. China Pacific Insurance fell 3.14 percent and Ping An Insurance slid 2.98 percent.
Property shares slipped, with the Hang Seng Property Index declining 2.72 percent. Mainland-listed developers lost 2.2 percent on average.
China Vanke (SZ: 200002), China's largest developer, dropped 1.20 percent despite announcing a first half profit rose 22.5 percent to RMB2.52bn. Guoxing Rongda Real Estate (SZ:000838) dropped 4.3 percent. China Enterprise Company Limited (SH:600675) dropped 4.3 percent.
In Hong Kong: Wah Ha Realty (HK:0278) dropped 8.7 percent. ITC Properties (HK:0199) dropped 6.4 percent. Beijing Capital Land Limited (HK:2868) dropped 6 precent.
Central China Real Estate (HK:0832) however surged 8.8 percent after announcing that a provate equity consortium led by FountainVest Partners plans to buy US$99m of convertible bonds from it.
Mainland-listed steel shares dropped 3.1 percent on average, on analyst predictions of a collapse in steel prices. The fate of the steel and real estate industries are closely linked, with the driver for steel demand almost exclusively being rod products used in construction.
Baoshan Steel (SH:600019) fell 4.31. Beijing Shougang (SZ:000959) fell 4.8 percent. Angang (SZ:000898, HK:0347) dropped 4.9 percent in Hong Kong and 5.1 in Shenzhen. Maanshan Steel (SH:600808, HK:0323) fell 2.5 percent in Shanghai and 4 percent in Hong Kong.
Coal shares were hit by profit-taking, dropping over 4 percent on average on the mainland markets. According to analysts, there could be an oversupply of coal if steel makers stop production in September due to high inventories.
China Shenhua Energy (SH:601088, HK:1088) lost 2.38 percent in Shanghai and 1.2 percent in Hong Kong. Yanzhou Coal (HK:1171, SH:601001) fell 2.5 percent in Hong Kong and 4.6 percent in Shanghai. Kailuan Energy Chemical Co. (SH:600997) fell 4.8 percent.
Northeast Electric Development Co. Ltd. (HK:0042), a producer of power transmission and transforming equipment, rose 11 percent.
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