Properties swoop in to save China’s stock markets

Both the China A and B shares owe their overall recent success to gains that have been made in the property markets.

The stock exchanges in China have their own particular groups for different shares from different companies. A-shares and B-shares are both from companies that were incorporated in the mainland of China and can be publicly traded in markets, but the difference between the two has to do with the people who can trade them. A-shares can only be traded by people native to mainland China, while B-shares can be traded by mainlanders and foreigners.

In the wake of announcements by the Chinese government that instituted energy price freezing, energy companies and the A-share market in general was hit. The only thing that saved the A-share market’s morning session was the fact that property companies across the board showed strong gains in the face of other companies seeing their stocks tumble.

China Merchants Property Development Co. Ltd. led the way with an announcement that their projected 2007 growth of net profits would be 100%. That announcement resulted in the company gaining a whopping 6.64% in the morning session alone, with the company trading at a price of CHY 71.18 at the time of the session’s close. Other strong performers included the COFCO Property Group (+5.91% to CHY 28.15) as well as producers of raw materials in response to the perceived health of the property industry in the A-share market.

At the same time that the strong performing property stocks were boosting the overall performance of the A-share market, they were soothing the downward motion and patching the damage within the B-share market. The overall Shanghai B-Share Index was down 0.06%, a number that could have been higher if it were not for the great dual performance of the A and B-share stocks of China Merchants Property Development. At the same time their A-share stocks were gaining rapidly, their B-share stocks also managed a very respectable 3.93% gain.