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Markets

Market dips on EU debt crisis jitters - May 19

By Chua Kong Ho (China Daily)
Updated: 2010-05-20 09:14
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Singapore - China's stocks fell, led by developers and shipping companies, on concern Europe's debt crisis and government measures to contain home prices will damp demand for Chinese exports and hurt earnings.

China Cosco Holdings Co, the country's biggest shipping line, lost 1.7 percent after Shanghai Securities News reported China's export growth to Europe may slow as much as 7 percentage points.

China Vanke Co and Poly Real Estate Group Co paced declines after Goldman Sachs Group Inc and Credit Suisse Group Inc cut profit estimates for property companies.

"Sentiment was already bearish as a result of government tightening," said Howard Wang, Hong Kong-based head of the Greater China team at JF Asset Management, which oversees about $50 billion. "It would be complacent for us to assume no impact from Europe."

The Shanghai Composite Index fell 6.98, or 0.3 percent, to close at 2,587.81, erasing an earlier 1.1 percent gain. The gauge has lost 21 percent in 2010, Asia's worst performer, after surging 80 percent last year.

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The measure entered a bear market on May 11 after falling 21 percent from its Nov 23 high. The CSI 300 Index slid 9.17, or 0.3 percent, to 2,762.17 on Wednesday.

Stocks around the world dropped and metals fell as the euro traded near a four-year low after Germany stopped speculators from some bets against government bonds and banks.

The BaFin markets regulator banned investors from naked short sales - speculating on declines in companies they don't own - for 10 banks and insurers, as well as naked credit-default swaps on euro-area government bonds starting on Wednesday.

China Cosco slid 1.7 percent to 10.16 yuan ($1.49) on concern Europe's debt crisis may slow a recovery in the industry. China Shipping Development Co dropped 1.5 percent to 9.53 yuan.

The growth of China's exports to Europe may slow by six to seven percentage points in May, June, and in the third quarter of the year as Europe's debt crisis deals a "severe" blow to foreign trade.

Bloomberg News

 

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