China markets slip on profit-taking and ahead of Shenzhen's Growth Enterprise Board launch
Chinese markets retreated slightly today as investors took profits following three day gains and drew money ahead of the expected launch of the Shenzhen Growth Enterprise board next week. The Hang Seng was down 0.3 percent while the Shanghai composite slipped 0.1 percent.
The China Enterprises Index, which represents large mainland companies listed in Hong Kong fell 0.8 percent. The Shenzhen Composite gained 0.3 percent as real-estate companies rose on strong property investment growth figures for last month.
The launch of a Shenzhen's Growth Enterprise Board is expected next week. Nineteen companies to be listed on the new board opened their initial public offering books for investors this week and are expected to attract RMB1.5 trillion of investment.
Banks fell today as China's banking regulator made comments urging caution in a meeting it held with the five biggest state-run lenders. The regulator instructed them to maintain a reasonable pace of lending and take measures to better control credit risks, adding that banks should ensure their capital adequacy ratios don't deteriorate.
Chinese banks issued a record RMB7.4 trillion in loans in the first half but have slowed down significantly in the third quarter to CNY1.3 trillion. The total for all loans last year was RMB4.9 trillion.
Industrial & Commercial Bank of China (HKG:1398, SHA:601398) fell 1.6 percent in Hong Kong and 1.2 percent in Shanghai. Bank of China (HKG:3988, SHA:601988) dropped 1.8 percent in Hong Kong and 1.2 percent in Shanghai. China Construction Bank (HKG:0939, SHA:601939) fell 0.9 percent in Hong Kong and 1.2 percent in Shanghai.
Steel producers were mixed after the National Development and Reform Commission (NDRC) said yesterday evening that it redress production overcapacity of steel and other key industries.
Steel prices in China have now fallen by 25 percent after hitting a 10-month high on August 4, as production overtook rising demand created by government stimulus. The biggest problem is for flat steel parts, used mostly by the auto and manufacturing industries. Beijing Shougang Co. (SHE:000959) dropped 1.2 percent . Gansu Jiu Steel Group (SHA: 600307) rose 3.2 percent. Wuhan Iron and Steel Co., Ltd. (SHA:600005) fell initially on the news but ended slightly higher at 0.1 percent.
Mainland listed property developers rose after China reported stronger-than-expected property investment figures for September. According to the National Bureau of Statistics, property investment was up 17.7 percent in the first nine months of 2009 compared to the same period last year. The growth rate is an 8.8 percent slowdown on the growth over the same period last year but higher than was expected.
Gemdale Corporation (SHA:600383) rose 2.2 percent, Poly Real Estate Group Co., Ltd
(SHA:600048) was up 0.5 percent and China Merchants Property (SHE:200024) rose 0.3 percent. However the Hang Seng composite properties and construction index dropped 0.4 percent. SOHO China Ltd (HKG:0410) fell 1.4 percent.
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