An upward trend in Chinese share prices came to a halt on Tuesday, as the property sector slumped with the tightening of a policy to prevent land hoarding.
The Shanghai Composite Index surged to more than 5,400 points in the morning session. It then turned down shortly after the afternoon opening and dipped to 5,345.34 points before it recovered to close at 5,386.53 points.
It edged down 6.81 points, or 0.13 percent, from the previous close, and ended a four-day run on stock markets since the start of the year.
The Shenzhen Component Index on the Shenzhen Stock Exchange closed at 18,268.13 points, down 108.83 points, or 0.59 percent, from the previous close.
The two bourses reported 300 gains against 1,270 losses. The Shanghai index, supported by strong blue-chips, however, reported only a slight loss.
Despite dropping share prices, the combined turnover of the bourses rose to 282.69 billion yuan (38.73 billion U.S. dollars), up slightly from 249.23 billion yuan on Monday.
The property sector was hit severely when the government issued a circular on Monday that urged local authorities to step up the execution of an existing policy to collect a 20 percent fee on idle land plots not put to use for development in more than one year. It could also take back through legal means land that had been idle for more than two years.
Guangzhou Donghua Enterprises Company, a major land developer, slipped 6.84 percent to 13.62 yuan on Tuesday, while Beijing Tianhong Baoye Real Estate Company dropped 6.64 percent to 39.21 yuan.
Official figures said property prices dropped last month in some of the 36 cities surveyed by the National Development and Reform Commission (NDRC).
Olympic Games related shares also headed downward after gains the previous day. Beijing Capital Tourism Company fell 4.06 percent to 47.79 yuan, and Beijing Urban-Rural Trade Center Company declined 2.66 percent to 17.90 yuan.
Financial stocks, however, were on the rise. China Life shares were particularly active and rose 3.99 percent to 58.13 yuan. The insurer's 34 billion yuan (4.66 billion U.S. dollars) of lock-up shares become tradable tomorrow.
China Merchants Bank (CMB), the nation's sixth-largest lender, released an estimate of its 2007 net profit on Tuesday, which stated it had soared 110 percent year-on-year to about 14.9 billion yuan. Its shares gained 3.17 percent to close at 40.31 yuan.
The securities sector was also boosted by a Citic Securities estimate of more than four times annual profit gains. Its shares closed up 2.6 percent at 92.88 yuan.
Oil stocks were also up as investors anticipated high-flying international crude prices would push the government to further increase domestic prices. Sinopec rose 2.63 percent to 24.22 yuan.
(Xinhua News Agency January 9, 2008)
