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1st Ld-Writethru: Chinese stocks down despite property policy easing

Xinhua, March 31, 2015 Adjust font size:

Chinese stocks dove into negative territory just ahead of the closing bell on Tuesday despite a policy easing to boost home sales announced on Monday.

The benchmark Shanghai Composite Index lost 1.02 percent, or 38.67 points, to finish at 3,747.9 points. The Shenzhen Component Index shed 0.25 percent, or 32.65 points, to close at 13,160.66 points.

Combined turnover on the two bourses expanded to 1.3 trillion yuan (211.65 billion U.S. dollars) from 1.22 trillion yuan on the previous trading day.

The property sector rose sharply in the morning trade following stronger-than-expected supportive policies announced on Monday.

China decided to relax mortgage rules for second home buyers to address demand for improved housing and lift the sagging housing market.

Minimum down payment levels for second home buyers in general will be lowered to 40 percent from the previous 60 to 70 percent.

Meanwhile, minimum down payments for second home buyers using public housing funds will be cut to 30 percent from the previous 60 percent; for first home buyers using public housing funds, the minimum down payment will be reduced to 20 percent of the home's value, down from the previous 30 percent.

Despite the policy support, the property sector lurched into negative territory with its sub-index down 1.09 percent. China Vanke, the country's biggest residential property developer lost 2.95 percent, dropping to 13.82 yuan. Poly Real Estate Group, China's second largest property developer by market value, shed 3.04 percent to 11.49 yuan.

"While the easing in housing policy will likely help to ease the downward adjustment in property prices, real estate investment growth will likely further decelerate from 10.5 percent in 2014 to about 6 percent in 2015, which will continue to drag on economic growth," J.P.Morgan China chief economist Zhu Haibin said.

Chen Dongwei, an analyst with CITIC Securities, said another reason for Tuesday's decline is market rumors that the China Securities Regulatory Commission will approve a new batch of IPOs this week.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, added 1.95 percent, or 44.69 points, to end at 2,335.17 points. Endi