China stocks drop in late trade on fears of new property curbs, trade war

SHANGHAI: China's stock markets fell sharply in afternoon trade to end lower Wednesday, as anticipation of more measures to curb property prices hurt developer shares, and as the Sino-US trade war looked set to escalate with the threat of higher US tariffs.

At the close, the Shanghai Composite index was down 1.8 per cent at 2,876.40.

The blue-chip CSI300 index was down 2.01 per cent, with the real estate sub-index skidding 4.52 per cent. The smaller Shenzhen index ended down 1.72 per cent and the start-up board ChiNext Composite index was weaker by 1.24 per cent.

The drops were fuelled by declines in the real estate sector on anticipation that the country would introduce more measures to curb the country's red-hot property prices after a meeting of the country's Politburo, a top decision-making body of the ruling Communist Party.

"For the short-term, the expectations of more measures to curb the country's property market will definitely have negative impact on the stock market," said Chen Xiaopeng, analyst with Sealand Securities.

China's southern boomtown of Shenzhen has stepped up property controls, including suspending purchases of new and existing residential property, the city government said on Tuesday.

The Politburo meeting also pledged to "resolutely curb" housing price rises and speed the process of establishing a long-term mechanism for the property sector.

Further pressure on stocks came from the Trump administration's plans to propose slapping tariffs of 25 per cent on $200 billion of imported Chinese goods after initially setting them at 10 per cent, in a bid to pressure Beijing into making trade concessions.

Fears of capital outflows amid a falling yuan would also add pressure on the stocks, Chen said.

At 0708 GMT, the yuan was quoted at 6.822 per US dollar, 0.06 per cent weaker than the previous close of 6.8181.

China's yuan strengthened on Wednesday, then eased as traders weighed the impact of reports of Washington's new tariff plans.

The largest per centage losses in the Shanghai index were Raisecom Technology Co Ltd down 9.71 per cent, followed by Jiang Zhong Pharmaceutical Co Ltd losing 8.79 per cent and Guizhou Changzheng Tiancheng Holding Co Ltd down 8.7 per cent.

The largest per centage gainers in the main Shanghai Composite index were Shanghai Shenhua Holdings Co Ltd up 10.1 per cent, followed by Orient International Enterprise Ltd gaining 10.04 per cent and GuiZhou YongJi Printing Co Ltd up by 10.03 per cent.

As of the close of trade Wednesday, the Shanghai stock index has lost 14.6 per cent of its value this year, while the CSI300 has fallen 14.5 per cent, making them the world's worst-performing major indexes.

About 14.95 billion shares were traded on the Shanghai exchange, roughly 109.5 per cent of the market's 30-day moving average of 13.65 billion shares a day.