Stocks fall most in two weeks on property concerns

Mainland stocks fell the most in two weeks as rising property prices boosted concern the government will deepen measures to curb speculation and reports of a probe into rubber futures fuelled a sell off in commodity prices.

China Vanke Co and Industrial & Commercial Bank of China Ltd paced declines for developers and banks as Jones Lang LaSalle Inc said Chinese government may further tighten anti-speculation measures.

Jiangxi Copper Co dropped the most in three weeks as metal prices slid after the Securities Times reported that regulators were investigating large positions in natural rubber futures.

China Shenhua Energy Co slid 2.1 percent as domestic coal prices fell the most in five months.

"It remains a big possibility that new tightening measures in the property market will come out as the pickup in prices is a bad sign for the government," said Zhang Kun, a strategist at Guotai Junan Securities Co in Shanghai.

The Shanghai Composite Index dropped 38.94, or 1.4 percent, to 2656.35 on Thursday, the biggest decline since Aug 25. The CSI 300 Index fell 1.8 percent to 2926.46. The market's losses accelerated in the afternoon on speculation inflation may have exceeded economists' estimates in August, spurring concern about higher interest rates.

A gauge of property stocks fell 2.4 percent for the steepest decline in the Shanghai Composite, adding to the 27 percent drop this year. The 21st Century Business Herald reported on Wednesday China may introduce a second-round of measures to curb the property market, including stopping loans to real estate developers and compulsory lowering of home prices.

The government is determined to see a decline in the nation's residential property prices and may increase mortgage rates and cash down payments for home purchases if residential prices don't decline, said Colin Dyer, chief executive officer with Jones Lang LaSalle Inc. Soufun data show a 12.3 percent monthly appreciation for Beijing homes in August and gains of almost 7 percent in Shenzhen and 6.6 percent in Guangzhou.

The recent increase in property prices and transaction volumes is a short-term fluctuation, the Shanghai Securities News reported, citing central bank adviser Xia Bin.

Hang Seng gains

Hong Kong stocks rose, paring Wednesday's biggest decline in a month, after Morgan Stanley said mainland's largest lenders will advance and Credit Suisse Group AG recommended buying Agricultural Bank of China Ltd.

The Hang Seng Index climbed 0.37 percent to 21167.27 on Thursday, with about three stocks advancing for each that fell. The Hang Seng China Enterprises Index of H shares of mainland companies rose 0.46 percent to 11830.46 on Thursday.

Source:China Daily