Property, automotive stocks decline
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Stocks on the Chinese mainland fell for the first time in five days while a report said that speculation gains in property prices and auto sales will slow this year.
China Vanke Co and Poly Real Estate Group Co slid after Premier Wen Jiabao asked local governments to help control growth in housing prices.
"There's still much uncertainty at this stage with inflation at a high level," said Wu Kan, a fund manager at Dazhong Insurance Co, which oversees $285 million. "We need to be a bit cautious."
The Shanghai Composite Index slipped by 0.24 percent to 3022.75 at the 3 pm close on Monday. The CSI 300 Index fell by 0.59 percent to 3333.43.
The Shanghai Composite Index has surged by 7.64 percent this year, as optimism about growth in the world's second-largest economy and corporate earnings has outweighed measures to cool inflation, which reached a 28-month high in November.
Investors should sell Chinese stocks after recent rallies given the risk of faster inflation and slowing economic growth, according to CITIC Securities Co. A possible slowdown in economic growth in the second quarter may hold back a rebound for stocks, analysts led by Xi Feng wrote in a report on Monday.
The stocks measured trade at 14.1 times estimated earnings, rebounding from a two-year low set in January of 12.7 times estimated earnings, according to weekly data compiled by Bloomberg.
A gauge of 34 property stocks in the Shanghai Composite dropped by 1.3 percent, the steepest decline this month. Poly Real Estate Group Co Ltd fell by 2.22 percent to 14.07 yuan ($2.15).
China may continue to raise interest rates this year as the country still faces pressure of rising prices and its deposit rate remains in the negative territory, the China Securities Journal reported on Monday, citing Xia Bin, an adviser to the People's Bank of China.
Shanghai Automotive Industry Corp, China's largest automaker, lost 0.90 percent to 19.72 yuan. First Automobile Works, which makes passenger cars with Volkswagen AG, dropped by 3.38 percent to 16.60 yuan. Beiqi Foton Motor Co fell by 3.23 percent to 23.34 yuan.
Hong Kong's Hang Seng Index fell the most in two weeks as Chinese developers dropped. The Hang Seng Index slid by 0.38 percent to 24303.07 at the close, the biggest drop since March 28, after rising by as much as 0.3 percent. The Hang Seng China Enterprises Index of mainland companies' H shares rose by 0.23 percent to 13684.06.
