China’s stocks fell, sending the benchmark index lower for the first time in more than a week, after exports and new bank loans grew less than estimated, boosting concern the nation’s economic slowdown is deepening.
Jiangxi Copper (600362) Co. led declines for material stocks on demand concerns after government data showed China’s exports rose 1 percent in July, compared with economists estimate for 8 percent growth. TCL Corp. (000100) dropped for the first time in six days after the consumer electronics company reported a decline in first-half net income. Kweichow Moutai Co. slid 4.9 percent after the biggest baijiu liquor maker’s profit growth slowed.
“The export figures show that it’s hard to improve China’s economy in the short term,” said Cao Xuefeng, an analyst at Huaxi Securities Co. in Chengdu. “There are definitely expectations for more reserve-ratio requirement cuts and other measures to boost the economy, but I doubt they will be effective. There are limited tools the government can use.”
The Shanghai Composite Index (SHCOMP) slipped 0.2 percent to 2,168.81 at the close. The CSI 300 Index (SHSZ300) slid 0.5 percent to 2,399.75. The Shanghai index climbed 1.7 percent this week, a second week of gains, on speculation slowing growth and easing inflation will allow the government to loosen monetary policy and adopt more fiscal measures.
China’s export growth was close to zero in July, raising the odds the government will take more-aggressive measures to support an economy the grew 7.6 percent in the second quarter, the slowest pace since 2009.
The growth in July exports compared with 11.3 percent in June, the customs bureau said. Imports rose 4.7 percent, compared with the estimate for a 7 percent gain and a 6.3 percent increase in June. The trade surplus was $25.1 billion compared with $31.5 billion a year earlier The median projection for the trade surplus was $35.1 billion.
China faces greater pressure in the second half of the year in order to realize the country’s 10 percent trade growth target for this year, Vice Commerce Minister Gao Hucheng said at a briefing in Beijing.
Jiangxi Copper, the biggest producer of the metal, declined 1.6 percent to 21.72 yuan. Yunnan Copper Industry Co. fell 1.3 percent to 16.89 yuan. Three-month copper fell as much as 1 percent to $7,460 a metric ton on the London Metal Exchange.
Deutsche Bank AG, which lowered its growth forecast for the Chinese economy after yesterday’s inflation and industrial output data, said it expects one interest-rate cut and two cuts in banks’ reserve-ratio requirements for the rest of the year as well as “modest” tax cuts for small businesses.
The People’s Bank of China has cut rates twice since early June and lowered lenders’ reserve requirement ratios three times starting in November as part of the government’s efforts to spur credit growth and support the economic expansion.
China’s new local-currency loans were 540.1 billion yuan in July and M2 money supply expanded 13.9 percent from a year earlier, the People’s Bank of China said on its website today. July’s new loans compare with the median estimate of 700 billion yuan in a Bloomberg News survey of 30 analysts.
Government reports yesterday showed inflation cooled for a fourth month in July, while industrial output and retail sales grew less than estimated and producer prices plunged more than expected.
China will be more cautious about adjusting monetary policy as inflation may pick up again, according to a commentary on the front-page of the China Securities Journal today. The economy may face a larger money supply, rebounding home prices and declining interest rates in the future, leaving less room for government fine-tuning, according to the commentary, written by a reporter at the newspaper named Ni Mingya.
Both Deutsche Bank and Barclays Plc cut their growth forecasts for China’s economy. Deutsche Bank lowered its 2012 growth estimate to 7.7 percent from 7.9 percent and its third- quarter forecast to 7.5 percent from 7.9 percent. Barclays cut its 2012 China growth estimate to 7.9 percent from 8.1 percent.
A gauge of consumer-staples producers fell 2.1 percent, the most among the 10 industry groups in the CSI 300.
Moutai slid 4.9 percent to 248.21 yuan, the biggest drop since March 27. It said yesterday first-half net income climbed 43 percent from a year earlier to 7 billion yuan. That compares with 58 percent growth in last year’s first half.
“Net income was below market expectations,” said Liu Hui, analyst at CSC Securities HK Ltd. “The shares have risen this year. Investors also wanted to take profits.”
TCL declined 1.6 percent to 1.90 yuan. The company’s first- half net income fell 48 percent from a year earlier to 282.7 million yuan, according to a statement to the Shenzhen bourse.
Chinese publicly traded companies are required to release first-half earnings results in July and August. Of the 886 companies in the Shanghai Composite, the 132 that reported second-quarter earnings had an average 1.4 percent profit decline, according to data compiled by Bloomberg as of Aug. 8. Profit rose 2.8 percent in the first quarter, the data showed.
The Bloomberg China-US 55 Index (CH55BN), the measure of the most- traded U.S.-listed Chinese companies, added 0.7 percent yesterday in New York. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong slid 1 percent today.
“Chinese stocks are taking a breather after rising for five sessions,” said Zhang Yanbin, an analyst with Zheshang Securities Co. in Shanghai. “Inflation has weakened so there are expectations the government has more scope to loosen monetary policy and there may be more reserve-requirement ratios cuts and the economy will stabilize.”
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