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HKong, Shanghai lower on China property

Monday, August 20 07:06:45

Shanghai shares tumbled to a more than three-year low in weak trading today, dragged by Chinese property counters over worries that an upturn in housing prices may lead to a fresh set of curbs on the sector. Sentiment was further weakened after a newspaper run by the Chinese central bank reported that the resumption of the 14-day reverse repo transactions last Thursday suggests that it had no intention of cutting the reserve requirements in the short term.

Weakness in mainland markets weighed on Hong Kong, with both markets underperforming Asian peers. The Hang Seng Index closed down 0.8 percent at 19,964.8 at midday, dipping below the 20,000 mark for only the second time in more than two weeks. The CSI300 of the top Shanghai and Shenzhen listings fell 1.1 percent to its lowest since Jan. 9. The Shanghai Composite Index slipped 0.9 percent to 2,096.5, the lowest since March 2009. "It's the case of the Monday blues," said Jackson Wong, vice-president for equity sales at Tanrich Securities. "Mainland investors are definitely more sensitive to the housing prices, although I think the latest monthly increase is more an effect of interest rate cuts," he added. Data over the weekend showed China's home prices rose 0.1 percent in July from June, a second month of modest uptick that raises the risk Beijing may seek to bolster a two-year campaign to curb housing inflation but which also weighs on the wider economy. The state-run Shanghai Securities Journal reported today. ( C) Reuters