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Markets fall as rumors batter real estate shares

By Yu Xi  (Global Times)

13:54, August 23, 2012

Stock markets in Shanghai and Shenzhen retreated Wednesday after being weighed down by drops in real estate stocks, which tumbled broadly due to fears that the government would soon broaden its trial property tax program.

The Shanghai Composite Index dropped 10.56 points, or 0.50 percent, to close at 2,107.71; while the Shenzhen Component Index declined 123.47 points, or 1.40 percent, to finish at 8,726.02.

Both benchmarks opened higher but slid throughout the morning session as property and brewing stocks took heavy losses. Real estate related stocks extended their slump into afternoon trading, pulling both indices down further in the process.

After the average home prices in 50 of China's 70 largest cities increased month-on-month in July according to data provided by the National Bureau of Statistics Saturday, rumors have been circulating among investors that the government may be mulling new curbs on the housing market and could soon expand the pilot property tax program now in place in Shanghai and Chongqing to more regions across the country, according to a report by the Economic Information Daily Wednesday.

Poly Real Estate Group surrendered 3.46 percent on the day to close at 9.49 yuan ($1.49). China Vanke dived 2.16 percent to 8.14 yuan.

Brokerage firms also stepped down Wednesday thanks to earnings concerns. The 10 securities firms that had issued first-half financial reports as of Wednesday saw their combined net profits slip to 4.3 billion yuan, down 22.4 percent year-on-year.

Huatai Securities shed 0.35 percent to end at 8.52 yuan Wednesday. Industrial Securities gave up 0.96 percent to 9.27 yuan.

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