In New York, most of the Chinese equities declined, thereby extending the first slump in the last 3 quarters. Many economists, at this point of time, are concerned that new limits on the wealth-management products will reduce the bank lending to the real estate companies.
The CH55BN gauge of the most traded Chinese stocks in US experienced a decline of 0.9% on today and is currently at 92.06. In the 1st quarter of the current year, the gauge has tumbled by 7.2%. The owner of the biggest real estate information website in China, SouFun Holdings Ltd. has experienced the largest decline in the last 3 weeks. On the other hand, the renowned property agent E-House China Holdings Ltd. experienced the biggest drop since 4th February. Among other companies, China Life Insurance Co. shares went down by 4%, however, Vipshop Holdings Ltd. jumped ahead.
On 1st March, China decided to tighten curbs on its property market. On yesterday, the Government told the banks to limit investments of client money in debt which is not publicly traded to 35% of funds that has been raised from the sale of the wealth management products. This decision was taken to cut the violations of the lending restrictions. According to the Fitch Ratings, the products are expected to jump up to 13 trillion Yuan at the end of last year, from a value of 8.5 trillion Yuan at the end of 2011.
According to the Chairman of Marketfield Asset Management LLC, Michael Shaoul, this recent funding curb may have more impact on the property sector, than what the previous curbs had, particularly when much of money is not available. This is when the demand will start to fall apart. Michael however is hopeful, at some time in 2013, the lows of 2012 will be pared; while saying so, he referred to the Chinese stock indexes.
The biggest Chinese exchange traded fund in US, the iShares FTSE China 25 Index Fund experienced a decline of 1.6% and is currently at $36.77. In this quarter, the same has tumbled by 9.2%. The benchmark gauge of US stocks, the Standard & Poor’s 500 Index advanced by 0.3% and is currently at 1567.48. In 2013, so far, the gauge has gone ahead by 9.9%. The Hang Seng China Enterprises Index of Hong Kong, on the other hand, declined by 1.3% to 10896.22.