China Stocks Fluctuate as Developers Drop, Copper Shares Rally

China’s stocks fluctuated as declines for developers on concern the government may take more measures to curb the property market offset a rally for the nation’s biggest copper producers as the metal’s price rose to a record.

China Vanke Co. and Poly Real Estate Group Co. slid more than 2 percent, leading declines for developers, after the Shanghai Daily said housing prices in major cities were “overpriced.” Air China Ltd. and SAIC Motor Corp. paced declines for airlines and autos as oil prices rebounded. Jiangxi Copper Co., the biggest producer of the metal, gained more than 2 percent after metal futures closed at an all-time high.

“Investors are prepared to see a higher or even peak inflation rate for November,” said Zhou Xi, a strategist at Bohai Securities Co. in Tianjin. “For the short- and medium- term, the market is going to fluctuate with downward pressure as it’s a policy-driven market.”

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, added 3.6 points, or 0.1 percent, to 2,852.21 at 10:16 a.m., even as twice as many stocks fell than those that gained. The CSI 300 Index was little changed at 3,171.49. Chinese stocks slid yesterday after the government moved forward the release of inflation data, triggering speculation the central bank may be preparing to boost borrowing costs this weekend for a second time since October.

Developers fell today on concern government efforts to slow price gains may not be working after the Shanghai Daily said new homes in major cities are “overpriced” by an average of 30 percent.

China Vanke, the nation’s largest developer, fell 2 percent to 8.32 yuan. Poly retreated 2.5 percent to 12.38 yuan.

Property Stocks

Prices of new properties in Fuzhou in the southeastern seaboard province of Fujian were most inflated, the paper said, citing the Chinese Academy of Social Sciences’ annual housing report. New homes in seven out of the 35 cities were more than 50 percent overpriced, according to the newspaper.

The statistics bureau will release November economic data on Dec. 11 at 10 a.m. local time. The data, which includes consumer prices, retail sales, fixed-asset investment and industrial output, was originally scheduled to be released on Dec. 13. Consumer prices gained 4.4 percent in October, the fastest pace in two years, because of higher food costs.

China’s inflation rate may be between 5 percent and 5.2 percent in November, according to Sinolink Securities Co.

The rise in consumer prices above 5 percent and the recent pick-up in property prices will increase the short-term risk of tightening, according to today’s note from the brokerage.

Money Supply

Tightening the money supply will a focus of China’s monetary policy next year as the government makes efforts to curb inflation, the 21st Century Herald said, citing Wu Xiaoling, former Chinese central bank deputy governor.

“There’s still room for further reserve ratio hikes,” Wu said, cited by 21st Century. The government should set an “even tighter money supply target” than the usual annual growth which is as much as 2 percent higher than the combined growth of gross domestic product and inflation, she said.

Air China, the largest international carrier, dropped 1.3 percent to 12.80 yuan. China Southern Airlines Co. slid 1.7 percent to 9.05 yuan. SAIC fell 1 percent to 16.36 yuan before the release of China November auto sales later today.

Oil rose for the first time in three days after a government report showed U.S. crude supplies declined almost three times more than forecast in the world’s biggest consumer of the fuel. The January contract added as much as 92 cents, or 1 percent, to $89.20 a barrel, in electronic trading on the New York Mercantile Exchange.

Copper and steel producers rallied on gains in metal prices. Jiangxi Copper surged 1.8 percent to 37.56 yuan. Yunnan Copper Industry Co. increased 1.1 percent to 24.35 yuan. Tongling Nonferrous Metals Group Co. added 3.5 percent to 28.16 yuan.

Copper Gains

The London Metal Exchange Index of six metals including copper and aluminum jumped 1.5 percent yesterday to the highest since Nov. 11. Copper futures climbed to a record close in New York on speculation that demand will outpace production as a global recovery sparks construction of new homes and appliances.

“The basic fundamentals are bullish,” said Lannie Cohen, the president of Capitol Commodity Services Inc. in Indianapolis. “China is still strong. Our recovery is looking better. It seems there is not enough copper to meet demand.”

Copper futures for delivery in March rose 5.1 cents, or 1.3 percent, to settle at $4.1005 a pound at 1:18 p.m. on the Comex in New York, the highest ever.

Baoshan Iron & Steel Co. led steelmakers higher after domestic prices of hot-rolled coil, a benchmark steel product, rose to the highest since May 12.

Baosteel gained 2.2 percent to 6.49 yuan. Angang Steel Co. added 2.4 percent to 8.08 yuan.

--Irene Shen. Editor: Allen Wan