China’s stocks fell, dragging the benchmark index down by the most in two weeks, as an unexpected drop in auto sales and a jump in money-market rates deepened concerns about the economy.
SAIC Motor Corp. (600104) led declines for automakers after Chinese vehicle sales shrank for the first time in eight months. Jiangxi Copper Co., the biggest producer, retreated 1 percent as Goldman Sachs Group Inc. said Chinese copper and aluminum demand is set to plunge by 2014. Shanxi Lu’an Environmental Energy Development Co Ltd. paced declines for coal producers after the government ordered output growth limits.
The Shanghai Composite Index (SHCOMP) slid 0.8 percent to 2,102.87 at the close, the most since Sept. 26. The CSI 300 Index (SHSZ300) dropped 0.9 percent to 2,302.53. The Shanghai index had risen the previous two days on signs the government is taking measures to support the market and boost consumer spending. The yuan rose beyond 6.28 per dollar for the first time in 19 years today on speculation policy makers will act to revive growth.
“After rebounding earlier this week, investors are now looking for concrete evidence to back up any gains in stocks such as better economic data or more loosening from the central bank,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “Before that happens, the market will remain in a consolidation phase as investors take a wait-and-see approach.”
The Shanghai index is down 4.4 percent this year on concern the government isn’t loosening monetary policy or introducing stimulus policies fast enough to counter the slowdown in the economy. The gauge is valued at 9.8 times estimated earnings, compared with the 17.8 average since Bloomberg began compiling the weekly data in 2006.
SAIC Motor, China’s biggest carmaker, dropped 3.3 percent to 13.25 yuan, the biggest decline since Aug. 22. FAW Car Co. lost 4.1 percent to 7.08 yuan.
China’s auto sales unexpectedly shrank for the first time in eight months as a territorial dispute with Japan turned consumers away from buying cars made by Toyota Motor Corp. to Nissan Motor Co.
Wholesale deliveries, including multipurpose and sport utility vehicles, fell 0.3 percent to 1.32 million units last month, the China Association of Automobile Manufacturers said in a statement yesterday. That compared with the 1.35 million average estimate of nine analysts surveyed by Bloomberg.
Jiangxi Copper slip 1 percent to 22.21 yuan. Yunnan Copper Industry Co. lost 1.4 percent to 16.59 yuan. Aluminum Corp. of China Ltd. slipped 0.4 percent to 5.07 yuan.
Copper and aluminum demand in China is set to get support until at least the middle of next year, boosted by construction, and then the wave is “set to crash by 2014,” Goldman Sachs said.
Smaller coal producers led declines for a gauge of energy stocks in the CSI 300. Shanxi Lu’an slumped 2.9 percent to 18.25 yuan. The government will guide domestic coal producers to limit annual production growth to below 4 percent, Wu Yin, deputy director of National Energy Administration, said at a conference in Beijing today. Production growth that is too high will hurt the coal price, Wu said.
China’s money-market rate rose, snapping a two-day decline, as the central bank scaled back its cash injections into the financial system.
The People’s Bank of China issued 47 billion yuan ($7.5 billion) of 14-day reverse repurchase agreements at a yield of 3.45 percent today and 12 billion yuan of seven-day contracts at 3.35 percent, said a trader at a primary dealer required to bid at the auctions. That compared with a fund injection of 265 billion yuan on Oct. 9, the second-biggest amount for a single day since Bloomberg started compiling the data in 2004.
“Those who saw the massive Tuesday injection as a sign of an easing shift are disappointed and the drop yesterday was so big that it begged for a correction,” said Dariusz Kowalczyk, a strategist at Credit Agricole CIB in Hong Kong. The smaller size of reverse repos “means that the PBOC is not trying to push money market rates much lower,” he said.
The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong added 1.8 percent today. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, gained 0.4 percent yesterday.
Chinese stocks in New York rebounded from a two-week low, led by Guangshen Railway Co., on prospects next month’s leadership change will pave the way for more government measures to stimulate the economy.
China will debut its new leadership during the 18th Communist Party Congress starting Nov. 8. BlackRock Inc., the world’s biggest money manager, said yesterday that the economy will recover as the new leaders act to boost local consumption.
China Railway Construction Corp. gained 2.6 percent to 4.79 yuan, the highest close since Aug. 1. The company won two projects worth a combined 5.2 billion yuan.
-- Editors: Allen Wan, Chan Tien Hin
To contact Bloomberg News staff for this story: Weiyi Lim in Singapore at firstname.lastname@example.org