Shanghai index closes lower as most shares fall

SHANGHAI's key stock index reversed morning gains and closed lower as almost 80 percent of the stocks in the market fell.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, edged down 0.13 percent, or 6.81 points, to 5,386.53 at 3pm today.

Losers in the Shanghai market outnumbered winners 649 to 135 and 64 were unchanged.

The Shenzhen Composite Index, which covers the smaller mainland stock market, was down 1.47 percent, or 22.44 points, to 1,505.56.

Property developers suffered a broad selloff after the government said today it will penalize developers that hoard land to push up prices.

Shimao Property Co, a Shanghai developer, shed 5.55 percent, or 1.33 yuan (18 US cents), to close at 22.62 yuan and North Star Co, a developer in Beijing, lost 3.82 percent, or 0.62 yuan, to 15.62 yuan.

Developers that acquire government land and leave it undeveloped for one year will be charged a 20 percent tax on the purchase price, the State Council said on its Website. It said land that goes undeveloped for two years can be confiscated without compensation.

To cool rising housing prices, regulators have raised minimum down payments to discourage speculative buying, imposed curbs on foreign investment and told banks to examine borrowers closely.

Despite that, already record-high housing prices in China's 70 biggest cities rose an additional 7.3 percent in the first 11 months of 2007, according to state media. Price rises of up to 19 percent for luxury homes have been reported over the same period.

Airlines also declined today as investors waited for China Eastern Airlines Corp shareholders to vote on the firm's stake to Singapore Airlines Ltd.

Air China, the world's biggest airline by market value, lost 2.18 percent, or 0.63 yuan, to close at 28.26 yuan.

Banks were among the gainers today, led by China Merchants Bank Co after it said its net income for 2007 more than doubled from a year earlier.

Net profit rose 110 percent, the lender said in a statement yesterday, citing unaudited numbers. Profit in 2006 was 7.1 billion yuan, or 0.48 yuan a share. The stock jumped 3.17 percent, or 1.24 yuan, to 40.31 yuan.

Industrial & Commercial Bank of China Ltd, the nation's biggest listed lender, rose 1.51 percent, or 0.12 yuan, to 8.09 yuan.

In the oil sector, China Petroleum & Chemical Corp, also known as Sinopec, surged 2.63 percent, or 0.62 yuan, to finish at 24.22 yuan.

Sinopec's Shengli field produced 27.7 million metric tons of crude oil in 2007 (554,000 barrels a day), the highest in nine years, Xinhua news agency reported, citing information from the company.

Shengli is China's second-largest oilfield behind PetroChina Co's Daqing.

Meanwhile, securities shares also increased as Citic Securities Co, Asia's largest brokerage by market value, gained 2.60 percent, or 2.35 yuan, to 92.88 yuan.

The company said its net income "is expected to rise more than 400 percent," citing an unaudited preliminary assessment without giving detailed financial figures.

Citic Securities shares, trading at 28.7 times estimated earnings, soared 233 percent in 2007. The company, which earned 2.4 billion yuan in 2006, is scheduled to release audited results on March 20.