China’s Stocks Fall to One-Week Low; Panjiang, Coal Shares Drop

China’s stocks fell, dragging the benchmark index to its lowest level in a week, after a leading gauge for the nation’s economy rose at a slower pace.

Guizhou Panjiang Refined Coal Co. and Yangquan Coal Industry Group Co. (600348) paced losses by energy producers. Jiangsu Yueda Investment Co. (600805), which makes cars with Kia Motors Corp., dropped 4.9 percent after profit declined. Chongqing Iron & Steel Co. jumped 10 percent after buying assets from its parent.

“The major concern is about earnings,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “The market will be range-bound before earnings improve.”

The Shanghai Composite Index (SHCOMP) slid 0.7 percent to 2,101.58 at the close, the lowest level since Oct. 16. About three stocks retreated for each that rose on the measure. The CSI 300 Index (SHSZ300) fell 0.7 percent to 2,291.24. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong dropped 0.5 percent. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, added 0.3 percent in New York yesterday.

The Shanghai Composite has rebounded 4.9 percent since reaching a three-year low on Sept. 26 on expectations regulators will introduce measures to stabilize the market ahead of a once- in-a-decade power transition of the Communist Party. The Shanghai gauge is down 4.5 percent this year and trades at 9.9 times estimated earnings for this year, compared with the 17.8 average since Bloomberg began compiling the weekly data in 2006.

Leading Indicator

The Conference Board’s leading index increased 0.3 percent from August to 241.2, the New York-based research group said in a statement today, citing a preliminary reading. That compared with a 1.7 percent gain in the previous month.

“The near-term outlook continues to be uncertain,” Andrew Polk, an economist with the Conference Board in Beijing, said in the statement today. The gauge’s “very modest pickup in September, due in large part to a heavy drag from real estate, points to an economy that is unlikely to pick up rapidly in the near term,” he said.

A measure of 25 energy stocks sank 1.4 percent today, the biggest loss among the CSI 300’s 10 industry groups.

Guizhou Panjiang slumped 9.3 percent to 15.46 yuan, its biggest decline in a year. Net income fell 10 percent from a year earlier in the first nine months, the coal producer said in an exchange statement.

Coal Earnings

Yangquan Coal fell 2.7 percent to 13.95 yuan after saying profit for the first nine months dropped 27 percent.

Jiangsu Yueda retreated 4.9 percent to 9.26 yuan after saying profit for the first nine months decreased 13 percent.

Out of 935 companies in the Shanghai Composite, 161 have reported third-quarter earnings with profits falling an average 4.5 percent from a year earlier, according to data compiled by Bloomberg. That compared with a 0.6 percent profit growth in the second quarter, the data showed. Listed companies are required to release third-quarter results by the end of the month.

China’s industrial-production growth will pick up this quarter, Zhu Hongren, chief engineer at the Ministry of Industry and Information Technology, said at a briefing today.

A preliminary reading of a purchasing managers’ index released yesterday by HSBC Holdings Plc and Markit Economics indicated fewer Chinese manufacturers are seeing deteriorating conditions in the sector than in the past two months. The measure follows government reports last week showing industrial production rebounded in September and retail sales surged.

Steelmakers Rally

Chongqing Steel jumped by the maximum 10 percent to 2.71 yuan. The steelmaker plans to acquire assets from parent for 16.9 billion yuan ($2.7 billion) by issuing shares, cash and assuming liabilities, according to an exchange statement.

Angang Steel Co. rose 2.3 percent to 3.61 yuan even after the steelmaker said yesterday it posted a third-quarter loss. Hebei Iron & Steel Co. added 1.7 percent to 2.47 yuan. Wuhan Iron & Steel Co. gained 2 percent to 2.55 yuan.

“Fourth-quarter profit at steelmakers may improve under current steel prices and raw-material costs,” said Shirley Zhao, an analyst with Mirae Securities Co. in Hong Kong. “Investors are also picking up bargain stocks as steelmakers are very cheap given their price-to-book ratios.”

Thirty-day volatility in the Shanghai Composite was at 16.6 today, compared with this year’s average of 17.2. About 8.5 billion shares changed hands in the gauge yesterday, 10 percent higher than the daily average in 2012.

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

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

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