China’s Stocks Retreat Most in a Month as Economic Growth Slows
China’s stocks fell, sending the benchmark index to its biggest loss in almost a month, after the economy grew at the slowest pace in two years and Germany damped expectations for a fast resolution to Europe’s debt crisis.
PetroChina Co. and Jiangxi Copper Co., the nation’s largest oil and copper producers, led declines by commodity producers after gross domestic product expanded less than analysts’ estimates. China Vanke Co., the biggest developer, slid 2 percent after home prices gained in fewer than half of 70 cities as sales eased. Sinohydro Group Ltd., the nation’s largest builder of hydroelectric dams, jumped 17 percent in China’s biggest initial public offering this year.
“The economic growth number wasn’t too bad but the European crisis is still a hangover for the stock market,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “A lack of cash also caps gains in stocks.”
The Shanghai Composite Index slumped 57 points, or 2.3 percent, to 2,383.49 at the close, the most since Sept. 22. The CSI 300 Index (SHSZ300) declined 2.8 percent to 2,592.21. Stock markets across Asia dropped today after German Chancellor Angela Merkel’s office knocked down what it called “dreams” that the Oct. 23 summit will be the last word in taming the crisis.
The Shanghai index has tumbled 15 percent this year, driving down estimated price earnings to 10.98 times, compared with the record low of 10.8 times set on Oct. 10, according to data compiled by Bloomberg. China has raised interest rates three times in 2011 and ordered lenders to set aside a bigger portion of their deposits to curb inflation that’s near a three- year high.
Gauges of energy and material stocks in the CSI 300 slid more than 3 percent, the most among the 10 industry groups. PetroChina fell 1.9 percent to 9.73 yuan. Jiangxi Copper lost 4.3 percent to 26.40 yuan. Anhui Conch Cement Co., the largest producer of cement, dropped 5.4 percent to 18.34 yuan.
China’s GDP gain of 9.1 percent was less than the median estimate of 9.3 percent in a Bloomberg News survey of 22 economists and follows a 9.5 percent gain in the previous three months. Industrial production increased 13.8 percent in September from a year earlier. That compared with the 13.4 percent median estimate in a Bloomberg survey and a gain of 13.5 percent the previous month. August. Retail sales expanded 17.7 percent after a 17 percent increase in August.
“Regarding market impact, today’s data are mixed due to below-consensus GDP growth and other above-consensus activity indicators,” Ting Lu, economist at Bank of America Corp. unit Merrill Lynch, said in a report to clients. “Overall, these data paint a soft landing picture.”
Angang Steel Co. retreated 5 percent to 5.12 yuan. The steelmaker started to halt a blast furnace because of weakening demand, showing iron ore consumption may retreat further. Steel prices in China have dropped to the lowest in 10 months amid the slowing global economy.
The Shanghai Composite had its best weekly rally since August last week on government support measures. The State Council announced easier access to loans for cash-strapped smaller companies, while a unit of the sovereign wealth fund began buying shares of the nation’s four biggest lenders and the Xinhua News Agency reported regulators approved cross-border exchange-traded funds.
China’s efforts to prop up economic growth won’t help it escape the hard landing that will probably arrive in 2013 or 2014, said Nouriel Roubini, chairman and co-founder of Roubini Global Economics LLC.
The prospect of a soft landing in China is a “mission impossible,” Roubini said at a seminar in Helsinki. Over- investment “always” leads a hard landing, he said.
New home prices in the most affluent cities, including Beijing, Shanghai, Shenzhen and Guangzhou, were among 30 that were unchanged from August, the statistics bureau said in a statement on its website today. A total of 16 cities posted declines in housing values and 24 recorded gains.
“The correction in China property market has already started,” Yao Wei, economist at Societe Generale SA, said in a phone interview. “The Chinese government would like to see home prices fall further before easing the measures.”
China Vanke declined 2 percent to 7.19 yuan. Poly Real Estate Group Co., the second-largest developer, slipped 4 percent to 8.93 yuan.
Sinohydro jumped 17 percent to 5.27 yuan. The company raised 13.5 billion yuan ($2.1 billion) by selling the shares at the bottom of a price range of 4.50 yuan to 4.80 yuan, surpassing the 9.5 billion yuan raised by Sinovel Wind Group Co. in its IPO in January. The shares were temporarily suspended in their debut today because of “abnormal” trading, the Shanghai Stock Exchange said on its website.
“Sinohydro’s businesses are viewed favorably,” Li Jun, a strategist at Central China Securities Co., said by phone. “Water conservancy is expected to rapidly develop in the next decade.”
The listing comes as China’s stock market slumps and liquidity tightens with small companies in cities such as Wenzhou facing a cash crunch.
The credit crisis in Wenzhou is a “partial” issue and does not pose “systemic risk,” Caixin Online reported yesterday, citing unidentified people close to the People’s Bank of China. Wenzhou’s request to borrow 60 billion yuan from China’s central bank won’t likely be agreed to as credit policy generally only targets certain industries and not regions, it said.
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