China Stocks Drop to Lowest Level in 2 Years as Developers Fall

[Bosonic]

Source: Bloomberg

China’s stocks fell, driving the benchmark index to the lowest level since March 2009, as housing sales slumped during a week-long holiday and energy producers declined after the government cut fuel prices.

China Vanke Co. and Poly Real Estate Group Co., the nation’s biggest developers, plunged more than 3 percent after industry sales dropped last week and Shanghai Securities News reported high inflation signals tight monetary policies will remain in place. PetroChina Co., the country’s largest oil producer, retreated the most in two weeks as the first reduction in fuel prices this year spurred concerns about earnings.

“Tight liquidity has hurt some small companies with anything related to monetary policy dragging banks and the market lower,” said Tu Jun, a strategist at Shanghai Securities Co. “Market sentiment is very weak at the moment and investors are more sensitive to bad news than good.”

The Shanghai Composite Index slipped 0.6 percent to 2,344.79 at the 3 p.m. close, the lowest since March 25, 2009. The CSI 300 Index (SHSZ300) lost 0.9 percent to 2,557.08.

Read more: http://www.bloomberg.com/news/2011-10-10/most-chinese-stocks-rise-after-holiday-airlines-advance-on-fuel-price-cut.html

[Firebrand Gary]

1. Blah, blah, blah. China is afraid of the Currency manipulation bill we are going to pass.

I also noticed this week, China was applying pressure with Taiwan over re-unification.

[red dog 1]

4. "China is kind of like our landlord...We should tread carefully"

China is the largest foreign holder of US debt. As of last January, China owned almost 1 Trillion dollars in U.S. Bonds.

"China is kind of like our landlord; or, if you prefer a more menacing term, our loan shark. We should tread carefully"

http://money.cnn.com/2011/01/18/news/international/thebuzz/index.htm/

[Ikonoklast]

2. China is sitting on a MASSIVE real estate bubble.

It has been written that they have 65 *Million* unsold housing units, entire cities worth of new housing, sitting there with no one living in them.

Stupendous overbuilding due to rampant real estate speculation.

They are trying to figure out just how to stem the inevitable.

I would avoid anything China for a fair bit.

[redqueen]

3. Speculation or GDP inflation?

It is my understanding that they've been inflating their GDP artificially by building what amount to ghost towns full of mostly empty properties. It will be interesting to see how they deal with this situation as it develops.