Moves to Cool Real Estate Market Hit Chinese Stocks

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The big news in the overnight markets was China's efforts to dampen the country's real estate market. Having learned from the real estate/mortgage crisis in the U.S., the Chinese have been attempting to slowly cool off speculation.

In response to the announced measuere, the Shanghai Composite Index fell 3.67% on Monday, which its biggest one-day decline since August 2011. According to reports, the pullback was driven by a selloff in the property developers following the government's recent decision to implement additional measures to cool the market.

The measures being implemented to try dampen housing market gains include higher down payments and mortgage rates in cities where prices have risen too quickly, higher transaction costs, increased qualification requirements, along with a stricter enforcement of a 20% capital gains tax on the sale of used homes (which is up from the current rate of 1% - 2%).

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