* HSI -1.5 pct, H-shares -2.1 pct, CSI300 -4.6 pct
* CSI300 suffer heaviest loss in more than 2 years
* Vanke, Poly Real Estate down maximum 10 pct
* Beijing's move will "freeze" property market near term:
* HSBC slips ahead of 2012 earnings, profit disappoints
By Clement Tan
HONG KONG, March 4 Hong Kong and China shares
slumped on Monday, with the CSI300 suffering its heaviest single
day loss in 28 months after Beijing hit property developers with
more tightening measures to contain housing costs that were
harsher than expected.
The announcement from China's cabinet late on Friday
involved a stricter implementation of a 20 percent capital gains
tax on existing home sales, strengthening home-purchase curbs
and increasing loan rates for buyers of second homes in cities
where prices are rising too quickly.
The CSI300 of the top Shanghai and Shenzhen
A-share listings closed down 4.6 percent, its worst daily
showing since November 2010. The Shanghai Composite Index
dived 3.7 percent in the heaviest bourse volume in a
The Hang Seng Index ended down 1.5 percent at
22,537.8, just above last Tuesday's two-month closing low. The
China Enterprises Index of the top Chinese listings in
Hong Kong sank 2.1 percent.
"Friday evening's announcement was very significant and
beyond the expectation of many in the market," said Hong Hao,
chief equity strategist at Bank of Communication International
"We are in a high risk zone now. I wouldn't advise clients to
add risk in the near term, since property is a huge sector. This
will have a ripple effect on other sectors in the economy," Hong
China's two largest developers by sales, Shenzhen-listed
China Vanke and Shanghai-listed Poly Real Estate
each plunged by the maximum 10 percent limit. The
Shanghai property sub-index plummeted 9.3 percent, its
worst single day showing since June 2008.
In Hong Kong, China Resources Land slumped 8.9
percent, reversing losses on the year. It is now down 2.4
percent in 2013, compared with a 0.5 percent loss on the Hang
Seng Index and 2.9 percent slide on the China Enterprises Index.
China State Construction Engineering, the
country's largest construction contractor, tumbled 9.7 percent
in Shanghai. Anhui Conch Cement , China's
largest cement producer, slumped the maximum 10 percent in
Shanghai and 4.8 percent in Hong Kong.
UBS downgraded their target prices by an average of 13
percent for 12 Hong Kong-listed Chinese developers they cover,
expecting new measures to "freeze" the entire market and delay
the originally planned sales schedules in the near term.
In the bond market, Chinese property bonds are down by 50
cents to a point lower in early deals with analyst watching if
local governments will follow up with their own measures.
China's property market has been rife with speculation about
rising house prices and what the country's new leadership may do
to curb them in the lead up to this week's annual parliamentary
The annual Chinese People's Political Consultative
Conference began on Sunday and the National People's Congress,
where Xi Jinping is expected to be confirmed as president,
starts in Beijing on Tuesday.
UBS DOWNGRADES CHINA BANKS
Chinese banks were also key sources of weakness after UBS
lowered price targets for the sector's Hong Kong listings by 3
to 16 percent and downgraded Agricultural Bank of China (AgBank)
from "neutral" to "sell" and Bank of China (BoC)
from "buy" to "neutral".
"We believe record high credit expansion in January will
trigger earlier-than-expected credit tightening in the second
quarter of 2013," UBS analysts said in a note dated March 1,
which also flagged rising risks from shadow banking.
AgBank shares shed 2.5 percent in Hong Kong and
3.4 percent in Shanghai. BoC shares sank 2 percent
in Hong Kong and 1.7 percent in Shanghai.
HSBC Holdings slipped 1.2 percent ahead of
its 2012 full-year corporate earnings. Up 3.6 percent on the
year, it is currently trading at a 40 percent discount to its
forward 12-month price-to-book multiple, according to Thomson
After market close on Monday, HSBC Holdings posted a near
$21 billion pre-tax profit for last year, falling short of
expectations but pledged to increase its dividend next year as
strong growth in Hong Kong and other core Asian markets boost