Actual finance blog

The governor of Tunisia’s central bank says the country is back in business and welcoming back investors.

Mustapha Kamel Nabli, appointed governor of the country’s central bank earlier this week, said Saturday at the World Economic Forum that the mere fact he was in Davos was an indication that “things are under control economically.”

He pledged that corruption and cronyism in the North African nation would be replaced by transparency.

Source

Bauer Performance Sports Ltd., the maker of hockey skates and sticks used by novice ankle-burners and NHL pros alike, plans to become a publicly traded company by selling shares on a Canadian stock exchange.

The Toronto-based company that developed the first one-piece blade-and-boot hockey skate and pioneered the lightweight Tuuk skate blade says it has filed a preliminary prospectus to launch an IPO. The 83-year-old company did not say when it might launch the offering or how much it would ask for its shares.

Steve Jones, a spokesman for the company, said Bauer could not comment further because the plan is under review by regulators in each of the Canadian provinces and territories.

Bauer gear is used by a host of National Hockey League superstars including Steve Stamkos, Jonathan Toews and Patrick Kane and its skates were once endorsed by hockey legend Bobby Hull.

Bauer designs, manufacturers and markets sports equipment and clothing under the brands Bauer Hockey, Mission Roller Hockey and Maverik Lacrosse. It

Federal Reserve officials closed ranks to signal that an improving economy won’t derail their plan to cut unemployment by pumping $600 billion into the financial system.

The pace of recovery is “insufficient to bring about a significant improvement in labor market conditions,” the Federal Open Market Committee said yesterday in a statement in Washington that won unanimous support for the first time in 13 months.

“They’re trying very hard in their statement to get people to stop jumping the gun” with an expectation that the record stimulus will end before the planned conclusion in June, said Ethan Harris, head of developed-markets economic research at Bank of America Merrill Lynch in New York. The Fed is saying, “we’re continuing our buying program and we’re not going to move for a long time,” he said. Harris put the odds of completing the purchases at 95 percent.

Chairman Ben S. Bernanke and his colleagues are strengthening their commitment to the asset purchases as two new members, Philadelphia Fed President Charles Plosser and Dallas Fed chief Richard Fisher, joined the policy-setting panel. Both men, who earlier criticized the program, supported the committee in saying the easing was needed to “promote a stronger pace of economic recovery.”

Plosser and Fisher were among four regional Fed presidents who rotated into voting slots for the year at this week’s meeting. They replaced officials including the Kansas City Fed’s Thomas Hoenig, who favored tighter policy as the lone dissenter in all eight decisions last year.

‘Better for Confidence’

“It’s much better for confidence for the markets when they’re putting up a united front,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida.

Stocks and commodities rose yesterday as the dollar fell. The Standard & Poor’s 500 Index gained 0.4 percent to close at 1,296.63, the highest since August 2008. The S&P GSCI Spot Index of 24 commodities rose 1.9 percent. The dollar fell 0.3 percent against a basket of six major currencies in New York trading yesterday.

The Fed left its benchmark interest rate in a range of zero to 0.25 percent, where it’s been since December 2008, and retained a pledge in place since March 2009 to keep it “exceptionally low” for an “extended period.”

“Growth in household spending picked up late last year, but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit,” the Fed’s statement said.

Added to Payrolls

Employers added 103,000 workers to payrolls in December, fewer than forecast by economists. The unemployment rate fell to 9.4 percent from 9.8 percent as many people dropped out of the labor force.

“They’re walking the delicate line between seeing enough improvement in the economy to believe their program had a positive effect while at the same time seeing enough weakness to justify completing it,” said Bruce McCain, chief investment strategist at Cleveland-based KeyCorp’s private banking unit, which oversees $25 billion. “They’re going to be in the frying pan over this right up to the end.”

Central bank officials downplayed increases in food and fuel costs, saying that “although commodity prices have risen, longer-term inflation expectations have remained stable, and measures of underlying inflation have been trending downward.”

Gasoline Price

The inflation gauge watched by the Fed, which excludes food and energy costs, showed a 0 pay day loans.8 percent increase in the 12 months through November. Central bank officials prefer that the inflation rate range from 1.6 percent to 2 percent. Prices of food, metals and petroleum-related products have increased, with the national average price of gasoline rising 15 percent in the past year to $3.11 a gallon.

“To ignore commodities entirely would suggest they’re oblivious, so they acknowledge the view is out there but immediately turn away with an almost disdainful tone,” McCain said.

Critics including Stanford University Professor John Taylor have said the bond purchases risk sparking too much inflation. Republican politicians including House Speaker John Boehner, as well as Chinese, German and Brazilian government officials, have said the policy may undermine the dollar.

“Threats by Congress to curb the Fed’s independence have a way of uniting foes within the Fed,” said Diane Swonk, chief economist at Mesirow Financial Inc. in Chicago.

Bernanke “has made it very clear that we would need a substantial improvement from where we are to justify a shift in policy,” she said. He “has clearly regained control of messaging, at least for now.”

Second Round

The Fed has acquired $261 billion of Treasuries since it started carrying out the second round of so-called quantitative easing on Nov. 12. That includes securities bought by reinvesting proceeds from payments on the mortgage debt bought during the first round of easing, which ran from December 2008 to March 2010 and resulted in $1.7 trillion of purchases.

Stocks have rallied since Nov. 3, when the Fed announced the policy, and inflation expectations have climbed. The five- year breakeven rate between nominal and inflation-indexed bonds rose to 1.89 percent yesterday from 1.47 percent on Nov. 3.

Housing is showing some life. U.S. previously owned homes were sold in December at the quickest rate in seven months as buyers tried to lock in low mortgage rates, and new-home sales rose more than economists forecast. Housing starts and home prices haven’t shown similar gains, and in their statement yesterday, Fed officials said housing “continues to be depressed.”

Begun to Recover

“While recent data suggests that the economy has started to recover, this improvement has not yet resulted in sustained job growth or higher consumer confidence, the two necessary components of any housing recovery,” Jeffrey Mezger, chief executive officer of KB Home, the Los Angeles-based homebuilder that targets first-time buyers, said in a Jan. 7 conference call.

Retail sales rose 0.6 percent in December, capping the biggest annual increase in more than a decade. Banks’ commercial and industrial loans increased for a seventh straight week through Jan. 12, the longest sustained gain since 2008, according to Fed data, though the improvement hasn’t been enough to convince Fed officials that the job market will take off.

“Policy remains on autopilot, with no serious consideration of more or less stimulus from previous meetings,” said Jim O’Sullivan, chief economist at MF Global Ltd. in New York. “The debate in the second half of the year may be on when to start allowing some of the asset purchases to unwind.”

Source

U.S. home prices have reached a bottom and may be set to rise in the first half as buyers take advantage of increased affordability, said Karl Case, the economist who co-founded the S&P/Case-Shiller home price index.

“Prices have gone flat, bouncing around at what I think is essentially a bottom,” Case, a retired professor of economics at Wellesley College, said in a radio interview today on “Bloomberg Surveillance.” “We’re really going to have to wait to see what the spring market brings.”

The S&P/Case-Shiller index of home values in 20 cities fell 1.6 percent in November from a year earlier, the biggest 12- month decrease since December 2009, the group said today in New York. The Federal Housing Finance Agency, which measures sales financed with mortgages backed by Fannie Mae and Freddie Mac, said separately that prices slid 4.3 percent from November 2009.

An abundance of inexpensive homes and an expanding economy will support housing demand as it enters the so-called spring selling season when the bulk of transactions typically occur, said Case, who created the price index with Yale University Economics Professor Robert Shiller. The National Association of Realtors’ affordability index, a gauge of median income against home prices, reached an all-time high of 184.5 in November.

Housing ‘Bargains’

“There are bargains out there,” said Case. Affordability will entice first-time buyers to jump into the market “if jobs are created at a pretty good clip,” he said.

The unemployment rate dropped to 9.4 percent last month after reaching a seven-month high of 9.8 percent in November, according to the Bureau of Labor Statistics. The jobless rate has remained above 9 percent for 20 months and will probably average 9.3 percent this year, according to a Bloomberg News survey of economists.

Consumer confidence in January climbed to the highest level in eight months as Americans became more optimistic about job prospects, according to a report today by the Conference Board. The share of people who said they intended to buy a home rose to 2.2 percent, the New York-based private research group said. That was the second consecutive gain after November’s 1.7 percent, which matched an all-time low set at the end of 2009.

The Federal Open Market Committee today began a two-day meeting in Washington that culminates with a policy statement at around 2:15 p.m. tomorrow. Since reducing its target federal funds rate to near zero in December 2008, the central bank has used its balance sheet as a monetary policy tool. Its assets have tripled to $2.43 trillion from $873 billion in February 2008.

The Fed probably will push forward with its plan to buy $600 billion in securities to stimulate the economy, based on the minutes to last month’s meeting released on Jan. 4. The recovery’s pace is likely to “remain modest, with unemployment and inflation deviating from the committee’s objectives for some time,” according to the minutes.

A real estate boom pushed prices in the 20 cities covered by the Case-Shiller index to a record high in July 2006 after almost doubling in six years. The benchmark tumbled 33 percent from its peak to an April 2009 low that put homes at 2003 prices. It has gained 3.3 percent since then.

– With assistance from Ken Prewitt in New York and Shobhana Chandra in Washington. Editors: Kara Wetzel, Rob Urban

Source

Under pressure to energize the economy, President Barack Obama said Saturday he will use his State of the Union address to outline an agenda to create jobs now and boost American competitiveness over the long term.

Heading quickly into re-election mode, Obama is expected to use Tuesday’s prime-time speech to promote spending on innovation while also promising to reduce the national debt and cooperate with emboldened Republicans.

“I’m focused on making sure the economy is working for everybody, for the entire American family,” Obama said Saturday in an uncommon preview of his speech, offered up in an online video to his supporters late Saturday afternoon. The president announced that the economy would be the main topic of his speech, a nod to how important that issue is to the country’s standing and his own as well.

At the halfway point of his term, Obama said the economy is on firmer footing than it was two years ago: it is growing again, albeit slowly, while the stock market is rising, and corporate profits are climbing. But with the unemployment rate stubbornly stuck above 9 percent, Obama will signal a shift Tuesday from short-term stabilization policies toward ones focused on job creation and longer-term growth.

Obama offered no details on specific proposals he will call for in his address, though he has offered hints in recent weeks.

Perhaps the clearest came in an overlooked speech in North Carolina last month, one that will likely serve as a template of what the nation is about to hear. Obama said then that making the U.S. more competitive means investing in a more educated work force, committing more to research and technology, and improving everything from highways and airports to high-speed Internet.

In his weekly radio and Internet address Saturday, Obama also highlighted free trade as a way to increase U.S. exports and put Americans to work.

“That’s how we’ll create jobs today,” Obama said. “That’s how we’ll make America more competitive tomorrow. And that’s how we’ll win the future.”

Obama’s challenge will be to find the money and political will to spend it, at a time when he’s pledged to reduce spending and tackle the mountainous debt. In his preview to supporters Saturday, Obama said he would emphasize fiscal restraint Tuesday, but didn’t go into detail, saying only that any spending cuts should be done in a “responsible way.”

The president is under growing pressure to tackle the debt from the public and lawmakers, particularly some newly elected Republicans who ran on pledges to cut spending. Obama, too, has made spending cuts a priority, setting up a bipartisan fiscal commission which recommended tax hikes and cuts to entitlement programs _ both efforts that would likely be a hard sell with the American people.

Obama will speak Tuesday to a Congress changed both by Republican wins in the November election and the attempted assassination of one of its own. Democratic Rep. Gabrielle Giffords was shot in the head two weeks ago during an event in her district in Tucson, Ariz.

Since then, the president has appealed for more civility in politics, and in a nod to that ideal, some Democrats and Republicans will break with tradition and sit alongside each other in the House chamber Tuesday night online cash advance. Obama hinted Saturday that he would build on that theme during the State of the Union, tying the country’s economic success to bipartisan cooperation.

“We’re up to it, as long as we come together as a people_Republicans, Democrats, Independents_as long as we focus on what binds us together as a people, as long as we’re willing to find common ground even as we’re having some very vigorous debates,” Obama said.

The White House sees competitiveness as a framework Republicans could support. GOP lawmakers traditionally have backed the types of trade deals and research-and-development efforts that Obama is promoting. Senate Minority Leader Mitch McConnell, R-Ky., appeared to give the president an opening when he said last week in a speech that “my advice to my colleagues is if the president is willing to do what we would do anyway, then we should say yes.”

Yet for all the talk of bipartisanship, Obama will deliver Tuesday’s address at a time when his White House is shifting into re-election mode. Obama plans to file papers to formally run for re-election around March, and several aides are moving to Chicago to run the 2012 campaign. Saturday’s video preview to supporters signaled a return to the campaign-style outreach Obama’s team mastered in 2008, and underscored his need to rally his base around his agenda.

The White House is keenly aware that Obama’s re-election prospects likely hinge on the state of the economy. More than half of those questioned in a new Associated Press-GfK poll disapproved of how he’s handled the economy, and just 35 percent said it’s improved on his watch. Three-quarters of those surveyed did say it’s unrealistic to expect noticeable improvements after two years. They said it will take longer.

Obama’s preview Saturday focused exclusively on his domestic agenda, with no mention of foreign policy. Obama is, however, expected to frame his call for competitiveness in global terms, calling for a new Sputnik moment _ a reference to the Soviet Union’s 1957 launch of the first satellite, ahead of the U.S. He intends to say the U.S. is again facing challenges from abroad, this time from fast-growing economies in China, India and throughout Southeast Asia.

In his travels to Asia and during Chinese President Hu Jintao’s recent trip to Washington, Obama has said he’s been struck by the rapid rise of that region and the laser-like focus on competing in the global economy.

“They are thinking each and every day about how to educate their work force, rebuild their infrastructure, enter into new markets,” Obama said in November, after wrapping up a 10-day Asia trip. “We should feel confident about our ability to compete, but we are going to have to step up our game.”

Source

Ontario electricity customers have subsidized power exports to the tune of $1 billion since 2006

Japanese housewives’ “secret savings” fell 18 percent to the lowest in three years in 2010 as slumping family incomes and rising prices for food and energy forced them to tap reserves, a survey shows.

The value of so-called hesokuri, the cash and investments that housewives stash without telling their husbands, fell to an average 3.1 million yen ($37,700) in 2010 from 3.7 million yen a year earlier, the lowest since 2007, according to a Sompo Japan Insurance Inc. report published today. Women traditionally handle family finances in Japan, collecting their husbands’ paychecks and making investment decisions.

Higher energy bills sparked by the country’s hottest summer on record and an 18 percent jump in vegetable prices prompted housewives to tap savings and cut pocket money doled to husbands from their bonuses. The use of savings to manage everyday expenses reversed last year’s trend of using hesokuri funds for one-time purchases such as travel or dining out, the report said.

“Because they’re charged with household finances, housewives can tell where Japan’s economy is going,” Minoru Sugiyama, an official at Sompo Japan who helped lead the survey, said in an interview. “Japanese people will be more defensive this year after cutting expenses and facing falling income. Family finances and Japan’s economy seem to be getting worse.”

Income Squeeze

Household confidence has slumped for six straight months as the economic recovery loses steam. Japan’s gross domestic product contracted at an annual 0.8 percent pace last quarter after consumer stimulus programs ended, according to the median estimate of economists surveyed by Bloomberg.

While some food prices rose last year, the country has struggled for more than a decade with deflation that has squeezed corporate earnings and workers’ pay, weakened consumption and made debts harder to pay off. Wages dropped at an average 1 percent pace in the past decade, and monthly pay slid 0.2 percent in November, Labor Ministry data show.

Housewives gave their husbands a smaller share of this winter’s bonuses to spend, today’s report showed, with the allocation falling 5.5 percent from a year earlier to 69,000 yen, the lowest since 2003.

Among the 500 respondents to the survey, 141 said the increase in vegetable prices had the biggest impact on their family budgets last year. The rise in energy bills due to torrid summer was the second and higher tobacco taxes ranked third.

Hot Weather

The average price of vegetables jumped last year in part because of hot weather, according to the Ministry of Agriculture. Onions rose 42 percent to 125 yen a kilogram, potatoes climbed 37 percent and tomatoes increased 21 percent.

Japan in 2010 had the hottest summer since records started in 1898, according to the Japan Meteorological Agency. Ten Japanese power companies sold 84.9 billion kilowatt hours in August, up 9.2 percent from a year earlier, according to the Federation of Electric Power Companies of Japan.

About 37 percent of housewives said declining cash flow forced them to use the secret savings to cover living expenses, while 21 percent used it to pay for one-time luxury spending — almost the exact inverse of a year earlier, the survey said.

The housewives plan to save money by using cheap ingredients. Some 233 respondents said they will use more bean sprouts to cook meals, while 80 housewives will consider tofu for breakfast and dinner, compared with 72 last year and 40 a year earlier. Five said they plan to use traditional seasonings on plain rice to stretch budgets.

More people said total financial assets, excluding hesokuri savings, dropped last year than people who said those assets rose, and the average decline per family was 1.2 million yen, the research said.

Sompo Japan DIY Life Insurance Co., a venture between Sompo Japan Insurance Inc. and Dai-Ichi Life Insurance Co., targeted 57,000 Japanese housewives in their 20s through 50s from Dec. 10 to Dec. 14. Of those, 8,300 responded to the survey, of which 500 answers were used. The average age of participants was 39.7.

Source

Missouri legislators should eliminate “a frenzy of telemarketing fraud and deception” by requiring companies selling extended auto-service contracts to be licensed by the state, according to a report released today by Missouri Attorney General Chris Koster.

The report was developed by Koster’s office and a task force he appointed to look into the business practices of service-contract sellers, many of which are based in the St. Louis area.

In recent years, the St. Louis area has been home to dozens of call centers for service-contract telemarketers. The firms have been accused of deceptively marketing the aftermarket vehicle coverage, making it difficult for customers to cancel, pocketing refund money owed to consumers and selling contracts riddled with fine-print exceptions and limitations.

The 24-page report encourages lawmakers to pass laws that would:

Require sellers to send written contracts to consumers within 30 days of an over-the-phone purchase, or before purchase if requested by a consumer; Make the firms refund every penny to consumers who cancel within 20 business days after the written contract has been mailed to them; and give prorated refunds to consumers who cancel after that free-look window. Prohibit some common, deceptive tactics used by service-contract sellers, including misrepresentations to consumers that their vehicles’ factory warranties have expired or are about to; that the seller is affiliated with an auto maker or dealer; or that the service contract “extends” a car’s factory warranty.

The recommendations “give consumers the right to know what they are buying and the ability to say no thank you when they’ve been lied to,” Koster said in a prepared statement best flat iron. “It is time for this outrageous behavior to end, and for this industry to be held to the same standards as other Missouri businesses.”

The report suggests legislators take no action when it comes to so-called product warranties, an unusual form of coverage sold by several St. Louis area service-contract firms.

The widespread sale of product warranties, which was made public in a Post-Dispatch investigation in 2009, is seen as especially problematic because they do not need to be refundable or underwritten by insurance companies. Technically, this coverage is tied not to a vehicle but to a product - like an engine or transmission additive - that is supposed to protect a vehicle against breakdowns.

After the story was published, Koster’s office sued several companies for selling the product warranties and accused them of selling insurance without a license. Product warranties masquerading as service contracts should remain illegal, the report said.

Koster proposes having service-contract sellers licensed by the state’s Department of Insurance, Financial Institutions and Professional Registration, Regulators would be able to suspend or revoke the licenses if companies employed fraudulent, coercive or dishonest practices.

Source

President Barack Obama on Tuesday ordered a review of federal regulations with an eye toward getting rid of those that stifle job creation and hurt economic growth, a move aimed at both soothing anger over the government’s reach and mending Obama’s relationship with the business community.

The president signed an executive order telling federal agencies to look for rules that place an unreasonable burden on businesses. Specifically, Obama said any regulations must reduce uncertainty, be written in plain language, be built upon public participation, and identify the “least burdensome tools” for achieving the goals of the new government rules.

In an opinion column in The Wall Street Journal, the president also said he wants agencies to look for outdated regulations that make the U.S. economy less competitive.

“It’s a review that will help bring order to regulations that have become a patchwork of overlapping rules, the result of tinkering by administrations and legislators of both parties and the influence of special interests in Washington over decades,” Obama wrote.

However, the executive order, which is similar to an order former President Bill Clinton signed in 1993, doesn’t cover some independent agencies that oversee the financial services industry, including the Securities and Exchange Commission and the Federal Reserve.

The order comes as Republican lawmakers, emboldened by broad victories in the midterm elections, move to scrap many of the administration’s programs and regulations, from the Environmental Protection Agency’s regulations on greenhouse gases to regulation of the Internet.

Rep. Darrell Issa (R-Calif.), chairman of the House Oversight and Government Reform Committee, wrote 150 trade associations, companies and think tanks last month seeking to identify regulations that businesses believe hurt job creation. He also named GOP Rep. Jim Jordan of Ohio to chair a new subcommittee that will investigate wasteful spending and federal regulations.

In a statement Tuesday, Issa said Obama’s review, “must be an effort that stretches beyond ideological entrenchments to identify the regulatory impediments that have prevented real and sustained job growth in the private sector.” He offered to provide Obama guidance based on the responses his committee gets from the business groups it has contacted.

White House spokesman Robert Gibbs said Tuesday’s executive order was not tied to GOP action on Capitol Hill, and said the proposal had been in the works for several months. The regulatory review follows several incidents over the past two years that have been blamed in part on insufficient or ineffective regulation, including the BP oil spill and the financial crisis.

Brendan Buck, spokesman for House Speaker John Boehner, said while Obama’s review is a welcome acknowledgment that government regulations have economic consequences, the president should take bolder steps to immediately reduce regulatory burdens on businesses.

Agencies have 120 days to submit a plan for how they intend to review existing regulations, and officials said it was too soon to say how their reviews could impact regulations already on the books, including the contentious greenhouse gas restrictions, which many business leaders and Republican lawmakers oppose.

The administration is hoping that the review, with its emphasis on eliminating regulations that limit the competitiveness of U.S. businesses, is another step toward repairing Obama’s relationship with the private sector.

Business groups have complained that new regulations implementing health care and financial reforms, among others, are holding back hiring and economic growth. The private sector has also been reluctant to invest some of the $2 trillion in assets it’s sitting on, in part because of uncertainty over government regulations and tax policies.

Obama has acknowledged that he needed to better manage his relationship with the private sector. He held a five-hour meeting with CEOs in December; he named William Daley, a business executive, as his new chief of staff; and next month, he’ll speak at the Chamber of Commerce, a trade group that has battled his top policy initiatives on health care and financial regulation.

Chamber president Tom Donohue welcomed the regulatory review Tuesday, but also said Congress should reclaim some the authority to implement checks and balances on agencies.

Aric Newhouse, spokesman for the National Association of Manufacturers, said the regulatory review was a positive first step toward job growth.

“This is an opportunity for the president to demonstrate results by eliminating unnecessary regulations already in the pipeline or delaying poorly thought-out proposals that are costing jobs,” said Newhouse, singling out EPA regulations as among those that are a threat to U.S. jobs.

While the review aims to streamline regulations, Obama said federal agencies won’t shy away from addressing regulatory gaps, such as new safety rules for infant formula and procedures that stop preventable infections from spreading in hospitals.

“We are also making it our mission to root out regulations that conflict, that are not worth the cost, or that are just plain dumb,” the president wrote.

Other regulations, such as the Clean Air Act or child labor laws, are necessary to prevent abuse, he wrote, and “strengthen our country without unduly interfering with the pursuit of progress and the growth of our economy.”

____

Associated Press writers Chris Rugaber and Alan Fram contributed to this report.

Source

China’s real estate prices rose for a 19th month in December, raising concerns that the government will expand curbs to limit the risk of asset bubbles in the world’s fastest-growing major economy. Property stocks fell.

Prices in 70 cities rose 6.4 percent in December from a year earlier, China Information News, the statistics bureau’s newspaper, reported today, less than the 7 percent median estimate in a Bloomberg News survey of six economists. Prices gained 0.3 percent from November, the newspaper said.

Property prices increased even as China suspended mortgages for third-home purchases and pledged to speed up trials of real estate taxes. The People’s Bank of China raised interest rates again on Dec. 25, after increasing them for the first time in three years in October.

Home prices are still rising, especially for existing homes, and that may lead to concerns that the government will continue its tightening of the property market and more cities will impose a limit on home purchases,” said Cathy Yin, an analyst at Shenyin Wanguo Securities Co. in Shanghai. “Investors are using that as a catalyst to sell property stocks.”

Prices of existing homes climbed 0.5 percent in December, the most in three months, according to the report.

The gauge tracking property stocks on the benchmark Shanghai Composite Index slumped 3.8 percent at the 11:30 a.m. local time break, the most among five industry groups on the key measure. China Vanke Co., the nation’s biggest listed developer, lost 4.4 percent to 8.65 yuan, and Poly Real Estate Group Co., the second biggest, declined 6.4 percent to 13.94 yuan, the biggest decline since Nov. 12.

More Bank Reserves

China’s central bank told lenders on Jan. 14 to hold more deposits as reserves for the fourth time in two months, lifting required ratios by half a percentage point. Premier Wen Jiabao said in a National Radio broadcast on Dec. 26 that measures to curb the country’s property market weren’t well implemented. The government also pledged to almost double the number of affordable housing to 10 million units in 2011.

“Continued increases in prices will worry policy makers, given how unaffordable homes have become,” said Dariusz Kowalczyk, economist with Credit Agricole CIB in Hong Kong. The slower price gain in December “is unlikely to be enough to prevent further measures to cool the market,” he said.

Investment in real-estate development in December rose 12 percent to 557 billion yuan ($84 billion) from a year earlier, according to the report, while full-year investment climbed 33 percent to 4.83 trillion yuan. Property sales increased 22 percent to 1.02 trillion yuan during the month, with 218 million square meters (2.3 billion square feet) of real estate sold, a 12 percent gain from a year earlier, the newspaper said.

Hainan’s Home Prices

Sanya, a resort city on Hainan island in China’s south, posted the biggest price advance in December among the 70 cities monitored, with values rising 43 percent from a year earlier. That’s followed by 36 percent gain in Haikou, the capital city of the island province instant payday loan.

Guangzhou, capital of south China’s Guangdong province, and Quanzhou, a city in Fujian province, reported the smallest prices gains among the 70 cities, each rising 0.4 percent in December from a year earlier.

“The growth slowed because developers didn’t dare to raise prices in fear of more government curbs,” said Jinsong Du, head of property research for Credit Suisse Group AG. “Many developers launched more homes in the market last month to meet their annual sales target.”

Further Price Gains

Today’s numbers came after private data indicated higher sales in December. SouFun Holdings Ltd., the country’s biggest real-estate website owner, said home prices in 100 cities it monitors advanced 0.9 percent in December from November, the biggest gain for at least six months.

China Vanke said revenue jumped 71 percent last year to 108 billion yuan, becoming the first developer in China to exceed sales of 100 billion yuan, a target it earlier set for 2014. Shanghai-based Shimao Property Holdings Ltd. said 2010 sales rose 34 percent to 30.5 billion yuan, and set a target of 36 billion yuan for this year.

Source