China Stock Futures Drop as Slowing Growth Curbs Profit Outlook

China’s stock-index futures fell, signaling declines for the benchmark index, on speculation the economic slowdown and property slump will curb earnings growth.

Futures on the CSI 300 Index expiring in January, the most active contract, lost 0.3 percent to 2,319.40 as of 9:16 a.m. local time. Aluminum Corp. of China. may decline after Sing Tao Daily reported the company’s general manager as saying the first half will be hurt by declines in prices and orders.

The Shanghai Composite Index dropped 23.91 points, or 1.1 percent, to 2,166.21 yesterday, the lowest close since March 2009. The CSI 300 Index fell 1.3 percent to 2,305.03. The Bloomberg China-US 55 Index slumped 0.3 percent to 95.48 as trading closed in New York.

Net income at Chinese industrial companies increased 24.4 percent in the first 11 months of 2011 from a year earlier, the National Bureau of Statistics said on its website yesterday. That’s down from 25.3 percent gain in the first 10 months and 27 percent in the first three quarters. Profits for state-owned enterprises last month declined 14.2 percent from a year ago.

Profit at most Chinese companies “will probably continue to be slow until they make some policy adjustments to help boost growth again,” said Jeff Papp, a Lisle, Illinois-based analyst at Oberweis Asset Management Inc. “Investors should find certain areas that the government is targeting to spend money on.”

Growth Slows

Vice Premier Li Keqiang said central government fiscal spending may grow faster in 2012 than in 2011, the Shanghai Securities News reported. Fiscal expenditures will focus on boosting domestic demand and improving people’s livelihoods, the newspaper cited Li as saying.

The average price of new homes in Shanghai fell 0.6 percent this fiscal year as of Dec. 23, the first decline at least since data were available in 2005, Caijing reported, citing China Real Estate Information figures.

China, the world’s second-largest economy, expanded 9.1 percent in the third quarter from a year earlier, down from 9.5 percent in the second. Consumer prices rose 4.2 percent in November from a year ago, the slowest pace in 14 months. The Chinese central bank cut the amount of cash lenders must set aside as reserves this month for the first time since 2008.

The Shanghai benchmark stock measure is trading at an estimated price-earnings ratio (SHCOMP) of 10.4 times. That compares with 13.8 for Indian stocks, 10.3 for Brazilian shares and 4.6 for Russian equities.

To contact the reporter on this story: Belinda Cao in New York at lcao4@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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