The Bank of New York Mellon China ADR Index, which tracks American depositary receipts, fell 1.5 percent, the most since Dec. 17, to 394.94 at 5:27 p.m. in New York. Aluminum Corp. of China Ltd., the country's largest producer of the metal, slid 5.5 percent to $32.11. E-House China Holdings Ltd., the Shanghai-based provider of real-estate services, dropped 6.2 percent to $17.85.
Reserve requirements will increase by 50 basis points starting Jan. 18, the central bank said on its Web site. The existing level for big banks is 15.5 percent. The decision indicates increasing concern in Premier Wen Jiabao's government that a continuation of the record 9.21 trillion yuan ($1.3 trillion) of loans in the first 11 months of 2009 will create a bubble in property and stock prices.
"This is one of the steps to prevent the housing bubble popping," Michael Cheah, who manages $2 billion at SunAmerica Asset Management in Jersey City, New Jersey. "They are going to keep tightening the monetary policy. It's going to be a setback for the stock market. Policy makers are happy to see a 15 to 20 percent correction in stock prices, which is healthy in the long run."
Cheah said he plans to set up a fund to invest in Chinese equities and that a pullback creates an opportunity to "buy the stocks cheap."
Wen pledged Dec. 27 to curb excessive property-price gains after a benchmark housing-price index rose 5.7 percent in November in its biggest increase in 16 months.
The American Stock Exchange China Index lost 1.6 percent to 211.28. In the domestic market, the Shanghai Composite Index rose 1.9 percent, the most since Dec. 24, to 3,273.97 after the nation's vehicle sales surged the most in at least 10 years.
-Editor: Lester Pimentel
