There was no reserve-ratio cut during the holiday

China Vanke Co. (000002) and Poly Real Estate Group Co., the nation’s biggest developers, slid more than 1 percent after the Beijing burberry outlet Morning Post said home sales in the capital dropped during the weeklong Chinese New Year holiday. Liquor maker Kweichow Moutai Co. paced declines for consumer stocks after retail sales growth slowed last week. Zijin Mining Group Co. led gains for gold producers after bullion prices jumped.

“There was no reserve-ratio cut during the holiday so liquidity will still be tight,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “It looks like the government isn’t in a hurry to release too much liquidity into the market as opposed to the market expectation of an immediate and aggressive relaxation.”

The Shanghai Composite Index (SHCOMP) slid 6.45 points, or 0.3 percent, to 2,312.67 at 10:18 a.m. local time. The CSI 300 Index declined 0.5 percent to 2,492.91. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, added 2.8 percent last week in New York. The MSCI Asia Pacific Index climbed 1.9 percent last week while the Hang Seng China Enterprises Index (HSCEI) rose 2.7 percent in the two trading days it was open last week.

Barclays Capital Asia Ltd., JPMorgan Chase & Co. and Industrial Bank Co. said this month that lenders’ reserve ratios were likely to fall ahead of the Lunar New Year festival, which boosts demand for cash. The central bank instead used reverse- repurchase contracts to add money to the financial system.
Avoiding Credit ‘Explosion’

“The central bank aims to ease policies prudently and pace loan growth at the beginning of the year so as to avoid a replay of the credit explosion in 2009 and 2010 and prevent inflation from rebounding,” said Lu Zhengwei, a Shanghai-based economist at Industrial Bank.

China’s money-market rate jumped for the first time in four days today. The seven-day repurchase rate, a gauge of funding availability in the financial system, surged 20.8 basis points, or 0.208 percentage point, to 4.3353 percent as of 10:03 a.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center.

Vanke, the nation’s biggest listed property developer, fell 1.3 percent to 7.80 yuan. Poly Real Estate, the second largest, lost 1.8 percent to 10.75 yuan.

Home sales in Beijing fell to zero during the holiday, the first time in three years that no sales were recorded for a week, the Beijing Morning Post burberry 2012 newspaper reported today, citing data from the local government. Average home prices dropped 23.6 percent from a year earlier as of Jan. 27, it said.
Economic Slowdown

Chinese manufacturing contracted in January for the second time in three months, according to the median estimate of nine analysts surveyed by Bloomberg before the purchasing managers’ index’s release on Feb. 1.

Kweichow Moutai, China’s biggest producer of baijiu liquor by market value, fell 1.4 percent to 183.38 yuan. Sales by China’s main retailers and restaurants during the Chinese holiday rose 16.2 percent from a year earlier to 470 billion yuan, the Ministry of Commerce said in a Jan. 28 statement on its website. That compared with a 19 percent gain in the same period last year, according to Guotai Junan Securities Co.

The Shanghai Composite gained 3.3 percent in the week ended Jan. 20, its first back-to-back weekly gain in two months, on speculation slowing growth will prompt the central bank to relax monetary policies and the government will take measures to support stocks. It’s up 4.8 percent this year. The Shanghai index trades at 9.5 times estimated earnings, near the record low of 8.9 times reached on Jan. 6, according to weekly data compiled by Bloomberg.
Quantitative Easing

Federal Reserve Chairman Ben S. Bernanke laid the groundwork last week for a third round of so-called quantitative easing, or QE3, saying that the Fed is prepared for further “accommodation.” The central bank, which bought $2.3 trillion of debt as part of QE1 and QE2, also reiterated a commitment to keep rates low until at least 2014.

The U.S. economy grew at a 2.8 percent annualized rate in the three months through December, compared with a forecast for a 3 percent increase. Growth accelerated from 1.8 percent in the previous quarter.

Emerging-market stocks would benefit from the cash injection created by a third round of U.S. asset purchases, with China, Russia and Taiwan looking “attractive,” Templeton Asset Management’s Mark Mobius said in a phone interview from Bangkok on Jan. 27.
Mobius Forecast

Chinese stocks will “probably see a rally” this week, said Mobius. “There’s no question” China will continue to loosen monetary policy and he recommends consumer, energy and commodity stocks in the country, he said.

Zijin Mining, China’s largest gold producer, rose 2.7 percent to 4.58 yuan. Zhongjin Gold Corp., the second largest, advanced 3.9 percent to 23.31 yuan.

Gold futures for April delivery gained 0.3 percent to settle at $1,735.40 an ounce on Jan. 27 in New York, the highest closing price since Dec. 7.Burberry childrenswear - jackets and coats, t-shirts, jeans, skirts, sweater.

Chinese listed companies have started to announce annual earnings reports and will finish before the end of April. Thirty-eight companies in the Shanghai Composite have released annual profits so far, gaining 19 percent on average and trailing estimates by 2.9 percent, according to data compiled by Bloomberg. That compared with an increase of 38 percent in the previous year.