China’s Stocks Fall Most in 6 Weeks on Export Slowdown Concerns

China’s stocks fell, dragging the benchmark index down by the most in six weeks, as political tension in Greece heightened concern Europe’s debt crisis may further slow Chinese export growth.

China Cosco Holdings Co. and Cosco Shipping Co. dropped more than 4 percent before a report tomorrow that will show Chinese export growth decelerated. SAIC Motor Corp. slid 2.9 percent after the Xinhua News Agency said China will ban executives at state-owned companies from excessive spending on items such as cars. Sany Heavy Industry Co. paced declines for construction machinery stocks after Nomura Securities Co. said sales of excavators last month were “disappointing.”

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, slumped 40.3 points, or 1.7 percent, to 2,408.59 at the close, the biggest drop since March 28. The CSI 300 Index (SHSZ300) declined 1.9 percent to 2,657.51. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, lost 1.9 percent in New York.

“If the Greece and euro woes continue, it will start to drag on the market as investors will be concerned about the effect on the economy,” said Larry Wan, Beijing-based head of investment at Union Life Asset Management Co., which manages the equivalent of $2.2 billion.

Even with today’s drop, the Shanghai index has climbed 9.5 percent this year on expectations the government will relax monetary policies and take more measures to bolster equities. The China Securities Regulatory Commission will accelerate the pace of approving qualified foreign institutional investors, Shanghai Securities News reported today, citing Wang Lin, head of the fund supervision department at the CSRC.

Export Data

Stocks in the gauge are valued at 10.3 times estimated earnings, compared with a record low of 8.9 times on Jan. 6, according to weekly data compiled by Bloomberg. About 10.5 billion shares changed hands in the Shanghai Composite yesterday, 33 percent higher than the daily average this year. Thirty-day volatility in the gauge was at 16.7 today.

China’s (SHCOMP) overseas sales gains may have cooled further to 8.5 percent in April from a year earlier, while import growth probably doubled to 10.9 percent, based on the median estimates of economists surveyed by Bloomberg ahead of a customs bureau report tomorrow. The trade surplus may have narrowed to $9.9 billion from $11.4 billion in April 2011.

China Cosco, the nation’s biggest publicly traded shipping company, dropped 4.2 percent to 5.24 yuan and Cosco Shipping retreated 4.9 percent to 4.90 yuan.

Greece’s leaders met for a second day to try to form a government after an election that raised questions about the nation’s membership of the euro. Alexis Tsipras, leader of the Syriza party who has vowed to rip up the terms of Greece’s bailout, was handed the mandate to form a government after Antonis Samaras of New Democracy failed to reach a deal.

‘Lot of Uncertainty’

Europe is China’s biggest export market, making up about 18 percent of the nation’s overseas shipments, according to Shenyin & Wanguo Securities Co.

China’s Communist Party may delay its planned five-year congress “by a few months” because of an internal debate on the size and composition of nine-member standing committee of the Politburo, Reuters said, citing unidentified people with knowledge of deliberations.

“There’s already a lot of uncertainty this year because of the political changes and if stimulus measures are stalled because the congress is postponed, that will have an impact on shares,” Wan said.

A delay is likely to fuel speculation there’s political infighting within the ruling party, BNP Paribas said in a note. This may have markets question the government’s ability to keep the Chinese economy on track in preventing a hard landing, it said.

Automakers Drop

SAIC Motor, the largest Chinese automaker, slid 2.9 percent to 15.53 yuan. Beiqi Foton Motor Co., the biggest commercial-vehicle maker, lost 3.3 percent to 8.57 yuan.

Executives at unprofitable state-owned companies may not buy cars or high-end office supplies, or redecorate offices, Xinhua said, citing a joint statement from three government departments including the Ministry of Finance.

Sany Heavy Industry, the biggest maker of excavators, fell 3.4 percent to 14.31 yuan. Demand for excavators dropped a “rather disappointing” 42 percent in April, Nomura said, citing data from China Construction Machinery Association.

There is a dearth of new construction, analyst Wenjie Ge said in a note dated yesterday. The company said on May 5 it may cut its unit-sales forecast for this year as government efforts to curb property speculation slow construction.

U.S.-Traded Shares

Zoomlion Heavy Industry Science and Technology Co., China’s second-biggest maker of construction equipment, sank 1.8 percent to 10.18 yuan.

The IShares FTSE China 25 Index Fund (FXI), the biggest Chinese exchange-traded fund in the U.S., declined for a fifth day, falling 2 percent to $36.43, the lowest close since April 11.

Of the 20 companies on the China-US gauge that have reported quarterly earnings since April 10, at least 10 fell short of analysts’ predictions, from Yanzhou Coal Mining Co. (YZC), China’s fourth-largest producer, and China Telecom Corp. (CHA), the nation’s biggest fixed-line carrier, data compiled by Bloomberg show.

Seven companies in the China-US index are expected to release first-quarter results this week, including budget hotel operator Home Inns & Hotels Management Inc. (HMIN) and chipmaker Semiconductor Manufacturing International Corp., the data show. casino company Melco Crown Entertainment Ltd. is set to announce results today.

-- Editors: Allen Wan, Chan Tien Hin

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net;

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

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