TO THE POINT: This summer everything is becoming more expensive--except for the stock market. Pork prices continued to soar in June, showing little sign of dropping off and defying the government efforts to pen them in. The yuan has also risen to a record high. Meanwhile, housing prices in Chinese cities are running higher with those in Beijing surging by 20 percent in June compared with those of May. International crude oil prices also surged over $71 per barrel, making Chinese oil refineries suffer. Quite the opposite, the prices of Chinese stocks in the yuan-denominated A-share market continued to decrease and were showing signs of slumping, damaging investor confidence significantly. By LIU YUNYUN

Bulls in Bear Skin Suits

The Chinese stock market is turning cold amid the hot summer season.

The benchmark Shanghai Composite Index fell “non-stop” from mid-June. After a sudden rise to 4,269 points on June 19, the benchmark index dropped one day after another to 3,616 points on July 5.

Most new investors who entered the stock market in May and June either suffered losses or were nicked badly. Those who made a fortune from the stock market earlier this year were seeing their profits gone overnight.

The Chinese stock market was the only one declining, while international markets were still on the rise.

The fear of restrictive macroeconomic policies in the coming months might have led to the recent slump. Others said it was only the repercussion of the previous news including the 1.55 trillion yuan special bond issuance and interest tax slash, approved by the legislation in late June.

The Monetary Policy Committee of the central bank stated in early July that China will continue applying consistent and moderate tightening monetary policies in the remaining months of this year.

Mutual funds have seen large amounts of redemption, and fund managers complained, “we don’t even know what we should buy and what shouldn’t.”

Investor confidence was hurt deeply, with many fearing the Chinese stock market would again slide into a “structural bearish” phase.

It is possibly safe to say that May 30 marked the peak day of the stock market, as on the next trading day, the Ministry of Finance suddenly raised the stamp tax on stock 0.2 percentage points-up to 0.3 percent from the previous 0.1 percent.

Altogether 653 A shares, accounting for 45 percent of all stocks, have so far dropped 30 percent of their value compared with their prices on May 30.

It is estimated that the total market value on June 29 dropped to 17.54 billion yuan, down 7 percent from early June.

The Shanghai Securities News reported the Chinese stock market is showing structural bearish features.

Yuan Breaks Record High

The Chinese currency hit a new high against the U.S. dollar at 7.5951 yuan to $1 on July 3.

It is the first time that the yuan’s value has exceeded the 7.6 mark. The yuan has climbed 2,136 basis points from its position at 7.8087 yuan to $1 posted on the last trading day of 2006. The accumulative appreciation of yuan exceeded 7.5 percent since China discontinued pegging the yuan to the U.S. dollar.

Chinese experts believe that as a fast growing economy with low inflation, it is inevitable that the Chinese currency will rise in value. It is believed a gradual appreciation of the yuan brings fewer risks than an abrupt one.

The Chinese central bank allows the yuan to trade within a band of 0.5 percent each day, and it is expected the yuan will further appreciate in the near future.

Costly Pork

For many Chinese households, eating pork has again become a luxury, as if it were the 1950s.

Soaring pork prices have scared many buyers away and pork vendors are complaining that pork isn’t selling. The wholesale pork price reached 19 yuan per kg in Beijing in early July, and is still on the rise. It rose nearly 30 percent higher than that of the same period last year.

The Chinese Government has taken several measures to cut the pork price, which so far has had little effect.

Many reasons contribute to the surging pork price: rising feed prices, fewer pigs and the long rainy season which makes pig vendors reluctant to transport pigs to cities.

Driven by the rising pork prices, the price of beef, a pork substitute, also increased moderately by 1 yuan.