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China developers drag down Hong Kong shares after fresh property curbs
March 27, 2017 / 8:20 AM / 8 months ago

China developers drag down Hong Kong shares after fresh property curbs

SHANGHAI, March 27 (Reuters) - Hong Kong stocks fell on Monday as fresh measures to curb China’s heated property market weighed on shares of developers, offsetting data showing strong profit growth for industrial companies early in the year.

The Hang Seng index fell 0.7 percent to 24,193.70 points, while the China Enterprises Index lost 1.1 percent to 10,362.02.

An index tracking mainland developers tumbled over 4 percent, led by industry heavyweight Vanke, after China restricted individual purchases of commercial properties in Beijing in the latest effort to curb real estate speculation.

Vanke fell nearly 5 percent. Though it reported on Sunday that its 2016 core profit rose 19 percent, thanks to record sales, the number fell short of market expectations.

Over a dozen cities in China have tightened controls on property purchases so far this month amid signs that home prices are picking up again in spite of a slew of earlier cooling measures.

Investors shrugged off fresh signs of China’s economic recovery.

Profits of Chinese industrial firms surged 31.5 percent in the first two months of 2017 from a year earlier, data showed on Monday.

A healthy pick-up in earnings had already been expected following sharp rises in producer prices in recent months, and compared with a weak performance in early 2016.

Moreover, many analysts fear the recovery, which is being mainly driven by the property sector and government infrastructure spending, is unsustainable.

Prices of materials shares also fell sharply.

Chinese steel and iron ore futures sank to their lowest in more than six weeks on Monday, extending a five-day losing streak as speculative investors continued their exodus amid mounting concerns about demand and growing inventories.[IRONORE/} (Reporting by Samuel Shen and John Ruwitch; Editing by Kim Coghill)

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