China’s stocks fell, led by property developers and brokerages, as valuations at a seven-month high raised concern a six-week share rally was excessive.
Poly Real Estate Group Co and Gemdale Corp lost more than 2.8 per cent on speculation the government will introduce real- estate taxes nationwide. Liquor maker Kweichow Moutai Co retreated 2.3 per cent after canceling a policy punishing retailers for cutting prices. A report showed China’s foreign direct investment slid 4.5 per cent in December, a smaller drop than the previous month.
The Shanghai Composite Index fell 0.7 per cent to 2,309.50 at the close. The index traded at 12.8 times reported earnings yesterday, the highest since May, according to data compiled by Bloomberg. It has risen 18 per cent from an almost four-year low on December 3 on speculation economic growth is picking up.
“There’s no major negative news and it’s just some profit- taking,” said Tang Yonggang, an analyst at Hongyuan Securities Co in Beijing. “Financial stocks were the first to advance in the upcycle, so they are leading the decline now. We have already gotten out of the long-term downward trend, so the fall today is only temporary. People are used to taking profits whenever they see some gains.”