The Daily China News Update is produced by Charles Silverman
Wall Street stages late rebound (The Financial Times)
Download 404.14 Kb.
|
- Navigate this page:
- China Housing Move Sends a Jolt (The Wall Street Journal)
Wall Street stages late rebound (The Financial Times)By Vivianne Rodrigues in New York http://www.ft.com/intl/cms/s/0/2e49a53c-847a-11e2-96f2-00144feabdc0.html#axzz2McFOPVkZ Monday 21:15 GMT. Stocks on Wall Street staged a late rebound, pushing blue chip stocks to their highest close since 2007, as investors saw value in growth assets after recent declines. Earlier in the day, a sharp fall for Chinese stocks triggered selling across global bourses after attempts by Beijing to cool the country’s property market raised fears of another headwind for global growth. However, European stocks came off their worst levels of the session and US benchmark indices rebounded – partly the result of comments by investor Warren Buffett telling CNBC he thought stocks were still relatively good value. The rebound also helped reduce initial demand for havens and gave a bounce to some commodities. The dollar index ended the session slightly lower after earlier hovering near a six-month high and core fixed income prices were in retreat, pushing 10-year Treasury and Bund yields up 3 basis points to 1.87 per cent and 1bp higher to 1.42 per cent, respectively. Gold fell $3 to traded at $1,572 an ounce. The FTSE All-World equity index erased an earlier loss to finish little changed on the day as the FTSE Eurofirst 300 ended only a fraction lower. The S&P 500 shrugged off most of its opening-bell slide to rise 0.5 per cent at 1,525. Another Wall Street stock barometer, the Dow Jones Industrial Average, closed on Friday within 0.5 per cent of a record high, with investors seemingly able to absorb concerns about political and budget tensions in the US and Europe. They were preferring instead to focus on improving US housing data along with continuing central bank support. The measure of blue-chip stocks ended yesterday’s session at 14,127 points, within sight of an all-time record at 14,165 points. However, the new week brought a fresh concern, the prospect of waning activity in the world’s second-biggest economy, and this kept a lid on any further gains for now. The Shanghai Composite slumped 3.7 per cent, its biggest daily loss since November 2010 according to Reuters, after the authorities introduced measures to cool the country’s property sector, which included higher down payments and mortgage rates as well as a tightening of enforcement of a 20 per cent capital gains tax on transactions. Banks and developers plunged on the news, with some property stocks trading down by their 10 per cent daily limit. Compounding the gloom were data released on Sunday that showed the country’s service sector expanded at the slowest pace in five months, which in turn followed a government manufacturing purchasing managers’ index released last week that also missed estimates. “It is increasingly clear that Chinese growth will slow from the second quarter onwards, and this will limit potential for recovery in Asia,” analysts at Crédit Agricole said in a research note. The FTSE Asia Pacific index (excluding Japan) shed 1.6 per cent after most of the region took the China news on the chin. Many industrial commodities saw early losses, but more buyers emerged as the session progressed. Copper rose 0.1 per cent at $3.49 a pound, but still near its cheapest since November. Brent crude reversed earlier gains to trade at $110.12 a barrel, down 0.2 per cent on the day. So-called commodity currencies remained on the back foot, with the Australian dollar down 0.4 per cent and its Canadian namesake off 0.1 per cent versus the buck. The euro was little changed at $1.3020 as worries about the political impasse in Rome kept the single currency near two-month lows. The Sentix survey of eurozone sentiment snapped a six-month uptrend in March, falling back as the inconclusive Italian election in February sapped confidence. Italy’s 10-year implied borrowing costs rose 6bp to 4.84 per cent. Another currency flirting with multi-month lows relative to the greenback was sterling. Weak construction and bank lending data briefly forced the pound below $1.50, its lowest since July 2010. Cable, as the cross is known, rebounded to trade up 0.4 per cent at $1.5104. One notable standout from the Asian bearishness was Japanese stocks. The Nikkei 225 rallied 0.4 per cent after Haruhiko Kuroda, the nominee for Bank of Japan governor, expressed his commitment to fighting deflation, boosting exporters by raising expectations of further weakness in the yen. Additional reporting by Jamie Chisholm in London China Housing Move Sends a Jolt (The Wall Street Journal)By ESTHER FUNG And TOM ORLIK Updated March 4, 2013 http://online.wsj.com/article/SB10001424127887324178904578339643109572734.html SHANGHAI—An aggressive move by China's government to strike at once-again-surging property prices shows rising concern that repeated tightening measures haven't brought prices fully under control. The realization that leaders are retightening screws surprised markets, which like many property buyers had concluded that leaders were satisfied with the results of their efforts and willing to tolerate a gradual return to rising prices and sales. Shares of Chinese developers plummeted on Monday, the first day of trading after policy makers said on Friday that they will strictly enforce a capital-gains tax of 20% on profits from home sales. China's State Council, or cabinet, also said it would reinforce controls on who is allowed to buy a home and push banks to raise down-payment and mortgage rates for second-home buyers in some cities. Leaders have worried about social frictions caused by homes spiraling out of reach for ordinary Chinese. Almost three years of attempts to make buying a home more affordable for the middle class had resulted in prices leveling out. But in the past few months, house prices in China's top-tier cities have again started to rise at alarming rated. Average prices for property in Shanghai were up 41% year-to-year in the first two months of the year, and Beijing prices are also rising fast, according to data from real-estate agency Soufun. "The government has not been able to break the cycle of expectations pushing prices higher and driving higher expectations. Someone has to get hurt, to convince people China's property is not a surefire bet," said Mark Williams, China economist at Capital Economics. Shenzhen-listed China Vanke 000002.SZ -9.97% Co, China's largest developer by volume was one of several property stocks to plunge the daily 10% trading limit Monday. The property hit helped drag China's benchmark Shanghai Composite Index down 3.7% for the day. Mainland developers in Hong Kong also fell sharply. China's property sector is a major contributor to economic growth, and concerns that the brakes were being applied in one of the world's locomotive economies also weighed on European stocks and the early U.S. session. Coming on the eve of the National People's Congress—China's annual legislature beginning Tuesday—the move signals leaders' concern that rising prices could push the economy off track, and contribute to dissatisfaction with the government. "To head off economic and financial risks, and to show it could achieve its own objectives on controlling prices, the government had to act," said Louis Kuijs, China economist at RBS. The recent uptick in property prices had raised questions about whether policy makers can deliver a more permanent solution to the problems of the housing market. Reaction to the latest moves in Shanghai was that they were likely to have a strong effect. "Home prices will definitely take a hit once the new regulations are in place," said Chen Jun, a real-estate agent at Haiyu Dichan, a property agency in Shanghai. Some Shanghai residents looking at investing in property saw the capital-gains tax as a strong limiting factor. "I was talking about these curbs with my friends and I think we would be better off investing in U.S. real estate," said Terry Li, an executive at an IT firm. Developers also took the move as a sign of the central government's determination to tighten the market. It "strengthens our view on the long-term nature of the property curbs," said a spokesman for China Vanke. The measures to quell housing costs since April 2010 have left China's central government in a game of whack-a-mole with real-estate developers, local governments and speculators—all of whom have an interest in continued rapid increases in prices. Leaders' efforts started to bring house prices back into line with income but did little to address the fundamental causes of China's property bubble, analysts say. Limited alternative investment options for households, local government reliance on land sales as a source of finance, and the persistent belief that China's house prices can only go up meant the pressure for unsustainable rises in prices remains. The latest moves appear aimed at preventing sharp increases in home prices spreading from China's first-tier cities to provincial capitals and smaller cities, where prices remain subdued. "The evidence is that prices in second-tier cities follow the top tier with a lag of a few months," said Jinsong Du, China real estate analyst at Credit Suisse. "The government wants to get ahead of that." Property developers face the prospect of slower sales. Yuzhou Properties Co., 1628.HK -4.81% a developer in the southeastern city of Xiamen, said the new rules would delay the launch of their high-end homes. "We have to wait for an opportune time to launch the villas," said Leo Yang, investor-relations manager. "You can't possibly launch it when the country is going through a tightening phase." The State Council has promised to expand China's nascent property tax, currently on trial in Shanghai and Chongqing. A nationwide tax would dent the enthusiasm of speculators by increasing the cost of holding property. But finding adequate new sources of revenue for local governments, and alternative investment options for households, remain intractable problems. Many analysts expected rising property sales and investment—the biggest single source of China's domestic demand—to provide a tailwind to growth into 2013. Renewed controls on the property sector suggest the government is prepared to pay a price in order to safeguard the gains from three years of property tightening. A weaker property market will hit demand for everything from steel to furniture and a car to park in the garage, denting the outlook for growth. Commodity exporters like Australia and Brazil, which feed China's steel mills, could also suffer. Real-estate developers come into the downturn with their balance sheets relatively robust. "The listed developers had strong sales in 2012, and also raised debt in the bond market," said Mr. Du, the Credit Suisse analyst. "They are saying that local governments will go bankrupt before they do." Directory: 2013 2013 -> Annual InStructional unit plan 2013 -> The Ministry of Education and Science of Ukraine 2013 -> #1 a lifesafer of virginia inc 2013 -> Name(s): your name here team or Group #(if applicable): Professor’s name 2013 -> Alcott Local School Council (lcs) Meeting Minutes 2013 -> Table Of Contents introduction 2 2013 -> Supplemental demographic information 2013 -> 【Education&Working Experience】 Download 404.14 Kb. Share with your friends:
|