Apr 9, 2012 -- China’s stocks fell, dragging the benchmark index to a one-week low, as faster-than-estimated growth in consumer prices damped speculation the government will ease monetary policy to bolster economic growth.
China Construction Bank Corp. (939) and Poly Real Estate Group Co. led financial companies lower after government data showed the nation’s inflation rate rebounded to 3.6 percent in March, from 3.2 percent the previous month. China Cosco Holdings Co., the world’s largest operator of dry-bulk ships, lost 2.2 percent after the U.S. economy added fewer jobs than estimated, dimming the outlook for global trade. China Shenhua Energy Co. dropped among coal producers after the Xinhua News Agency cited an industry association as saying demand for the fuel may slow.
“Rebounding inflation will weigh on investor sentiment,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “Some of the expected monetary easing such as a reserve ratio cut may be delayed.”
The Shanghai Composite Index (SHCOMP) fell 0.9 percent to 2,285.78, the lowest close since March 30. The CSI 300 Index (SHSZ300) lost 1 percent to 2,495.15. Thirty-day volatility in the Shanghai index was at 18, near the highest level in a month. About 7.3 billion shares changed hands on April 6, about 17 percent less than the daily average this year.
The Shanghai gauge has gained 3.9 percent this year on speculation the central bank will lower lenders’ reserve requirements and reduce borrowing costs to counter slowing economic growth. Stocks in the Shanghai Composite are valued at 9.7 times estimated earnings, compared with a record low of 8.9 times on Jan. 6, according to weekly data compiled by Bloomberg.
Construction Bank, the country’s second-largest bank, slid 1.3 percent to 4.67 yuan. Poly Real Estate, China’s second- largest developer by market value, fell 0.6 percent to 11.29 yuan.
China Merchants Bank Co. (600036) lost 1.1 percent to 11.68 yuan after regulators approved the lender’s plan to raise 35 billion yuan ($5.5 billion) in a rights offer. China Vanke Co., the nation’s biggest listed property developer, retreated 1.9 percent to 8.22 yuan.
Last month’s increase in consumer prices exceeded the median 3.4 percent estimate in a Bloomberg News survey of 33 economists. Higher-than-expected inflation may limit the magnitude of policy loosening, Goldman Sachs Group Inc. said in an e-mailed note today. At the same time, gains in consumer prices are likely to slow in the coming months, it said.
The statistics bureau is scheduled to report China’s first- quarter gross domestic product and other March data including industrial production on April 13. The economy probably grew 8.4 percent in the first three months of the year, according to the median estimate of 38 economists surveyed by Bloomberg.
The economy expanded 8.9 percent in the fourth quarter of 2011, the least in 10 quarters. The government last month lowered this year’s economic growth target to 7.5 percent, after keeping the goal at 8 percent over the past seven years.
China Cosco fell 2.2 percent to 5 yuan. Cosco Shipping Co., a unit of China’s biggest shipping company, lost 1.7 percent to 4.67 yuan. China Shipping Development Co., a unit of China’s second-biggest sea-cargo group, dropped 1.3 percent to 5.99 yuan.
China’s cabinet ministries are studying supportive measures for lowering taxes on Chinese shipping lines, the Economic Observer reported today, citing an unidentified person. The possible policy changes may allow the companies to pay taxes based on tonnage of shipping, instead of the current corporate income tax rate, the report said.
U.S. Job Data
The MSCI Asia Pacific Index (MXAP) dropped 0.6 percent today after the U.S. Labor Department said on April 6 that employers added 120,000 jobs in March, the lowest number in five months. The jobless rate fell to 8.2 percent, the lowest level since January 2009, from 8.3 percent, it said. U.S. markets were closed April 6 for a national holiday.
The U.S. is China’s second-largest export market, making up about 17 percent of the nation’s overseas shipments, according to Shenyin & Wanguo Securities Co.
Shenhua, the nation’s largest coal producer, fell 1.9 percent to 25.52 yuan. China Coal Energy Co., the second- biggest, sank 2 percent to 8.90 yuan.
China’s coal demand may continue slowing in the second quarter as the economy decelerates, Xinhua reported yesterday, citing Wang Xianzheng, chairman of the China Coal Industry Association.
The Shanghai Composite gained 1.9 percent last week after the China Securities Regulatory Commission increased the investment quota available for qualified foreign institutions to $80 billion from $30 billion.
The Securities Association of China has proposed to the regulators to allow some Chinese investors to buy overseas securities directly through qualified domestic institutions, the Securities Times reported today, without saying where it got the information. The association suggested the country do this by using the current quotas approved by the State Administration of Foreign Exchange.