China Stocks Fall Most in Two Weeks as Loan Curbs Maintained

July 13 (Bloomberg) -- China’s stocks fell, with the benchmark index declining the most in two weeks, after the government quashed speculation it will abandon real-estate curbs that drove property prices to snap 15 months of gains.

China Vanke Co. and Bank of China Ltd. dropped among developers and lenders after the government said it will “strictly” enforce housing policies to prevent speculative real estate investment. Jiangxi Copper Co. slid 2.8 percent, ending five days of gains, while China Shenhua Energy Co. retreated 2.4 percent.

“The government isn’t likely to relax tightening measures as it wants to transform the country’s growth model to focus on consumption rather than investment,” said Zhang Qi, an analyst at Haitong Securities Co. in Shanghai.

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, lost 29.73, or 1.2 percent, to 2,460.99 as of 10:27 a.m., the most since June 29. The CSI 300 Index fell 1.4 percent to 2,638.42.

The Shanghai Composite jumped 3.7 percent last week, the most this year, on speculation the government will adopt a looser monetary policy. The gauge has slumped 25 percent in 2010, making it Asia’s worst performer, on concern government efforts to curb inflation and property speculation will slow the economy.

China’s property prices fell 0.1 percent in June from the previous month, ending 15 months of gains, statistics bureau data showed yesterday. New lending of 603 billion yuan ($89 billion) last month was the least in three months, the central bank said July 11.

The Ministry of Housing and Urban-Rural Development reiterated that it will maintain curbs on speculative purchases and increase market supply. The statement was in response to media reports that said China may abandon its current property policies, it said.

Bank Regulator

China’s banking regulator also said it has made no changes to policies on home loans, according to a statement posted late yesterday to the website of the China Banking Regulatory Commission. The regulator called on commercial banks to strictly enforce home loan rules, it said.

Vanke, the nation’s biggest developer, fell 1.8 percent to 7.50 yuan. Price cuts by Vanke have been among signs the market is cooling as the government cracks down on speculation. Poly Real Estate Group Co., the second largest, dropped 2.6 percent to 11.53 yuan.

A measure of property stocks on the Shanghai Composite slumped 2.4 percent, the most among the five industry groups. The real-estate gauge jumped 2.6 percent yesterday after the Southern Metropolis Daily reported China may loosen limitations on third-home loans as the curbs reaped their intended effects on the real estate market. Some Chinese banks have eased standards for mortgage lending, at least on a case-by-case basis, according to Credit Suisse Group AG in a report yesterday.

Bank of China retreated 1.4 percent to 3.52 yuan. Industrial & Commercial Bank of China Ltd., the nation’s biggest listed lender lost 0.7 percent to 4.27 yuan.

Shanghai Banks

Shanghai-based commercial banks have maintained second-home loan curb policies, the Shanghai Banking Association said yesterday. It has not loosened the measures, it said. The Oriental Morning Post reported July 8 that some commercial banks based in the city have eased policies for second-home buyers.

Harvard University professor Kenneth Rogoff said July 6 that a “collapse” in real estate is beginning, while Barclays Capital forecasts prices may fall as much as 30 percent in the next 12 months.

Jiangxi Copper, China’s biggest producer of the metal, slid 2.8 percent to 24.60 yuan, snapping a five-day, 13 percent rally. China Shenhua Energy retreated 2.4 percent to 21.73 yuan.

Zinc declined 1.4 percent on the London Metal Exchange, reversing a gain of 0.5 percent, while copper and aluminum trimmed their advance.

China doesn’t plan to delay or suspend initial share sales in Shanghai or Shenzhen, the China Securities Journal said, citing an unidentified official at the China Securities Regulatory Commission. The comments refute media reports saying China is considering suspending new IPOs to stem further declines in the stock market, it said.

Agricultural Bank of China Ltd., which begins trading in Shanghai on July 15 and in Hong Kong the day after, raised $19.2 billion in the world’s biggest initial public offering in four years.