China Stocks Snap Biggest Rally in 3 Months on Moutai

Chinese stocks fell, with the benchmark index failing to extend the biggest one-day rally in three months, as losses for consumer-staple companies overshadowed gains for property developers.

Kweichow Moutai Co., the largest maker of baijiu liquor, slumped for a fifth day, leading a gauge of consumer-staples producers to the steepest retreat among 10 industry groups in the CSI 300 Index. (SHSZ300) Goertek Inc. (002241), a supplier to Apple Inc., dropped 1.8 percent after Apple fell to the most in almost four years. Poly Real Estate Group Co., the second-biggest listed developer, advanced 1.6 percent after November sales jumped.

The Shanghai Composite Index (SHCOMP) slipped 0.1 percent to 2,029.24 the close, with two stocks retreating for every one that gained. It jumped 2.9 percent yesterday as construction stocks surged after the first meeting by the ruling party under new leader Xi Jinping signaled increased urban development. The CSI 300 Index lost 0.2 percent to 2,203.60 today.

“Local investors are more cautious” after yesterday’s rally, said Xu Shengjun, an analyst at Jianghai Securities Co. in Shanghai. “We are not positive on the outlook for stocks. If there are no concrete reforms by the new leadership, the economy won’t grow.”

The Shanghai index has fallen 7.7 percent this year, making it the worst-performing major market in Asia amid concern China’s economy will grow at its slowest pace in more than a decade this year. The measure trades at 11.2 times earnings, compared with a record low of 10.9 set on Nov. 30, according to data compiled by Bloomberg.

Growth Outlook

The Chinese government set an economic growth target of 7.5 percent for 2012. Gross domestic product will expand 7.7 percent this year and accelerate to 8.2 percent in 2013, the Xinhua News Agency reported yesterday, citing a paper released by the Chinese Academy of Social Sciences. The economy has reached a bottom and is stabilizing, the China Securities Journal reported, citing the head of the State Information Center’s economic forecasting department, Fan Jianping.

Trading volumes in the Shanghai Composite were 34 percent above the 30-day average for this time of day, according to data compiled by Bloomberg. Thirty-day volatility in the gauge was at 15.7, compared with this year’s average of 16.9. The Hang Seng China Enterprises Index (HSCEI) was unchanged today. The Bloomberg China-US 55 Index (CH55BN) climbed 1.9 percent in New York.

A gauge of consumer staples in the CSI 300 lost 1.1 percent, the most among 10 industry groups.

Consumer Staples

Kweichow Moutai retreated 1.2 percent to 194 yuan. The stock dropped on speculation a Hong Kong consumer sent product samples for testing in the territory, said Liu Wei, an analyst at Masterlink Securities Corp. Moutai products are “fully in line” with national standards, said Li Hongfang, spokeswoman for company. Wuliangye Yibin Co. (000858), the second-biggest maker of the fiery baijou liquor, slid 1.1 percent to 24.76 yuan.

Moutai has fallen 26 percent since reaching a record high on July 13. Liquor makers have tumbled after the nation’s quality watchdog found excessive levels of plasticizer in drinks made by JiuGuiJiu Co.

Goertek retreated 1.8 percent to 38.01 yuan. Apple shares declined the most in almost four years yesterday on concern that the company will lose ground in smartphones to Nokia Oyj in China while giving up market share to Google Inc. in tablets.

Poly Real Estate rose 1.6 percent to 12.27 yuan after posting a 77 percent gain in sales last month to 8.7 billion yuan ($1.4 billion). China Vanke Co., which reported this week that its sales value doubled last month, climbed for a sixth day, rising 1.4 percent to 9.27 yuan. Gemdale Corp. added 1.4 percent to 5.86 yuan.

Credit Suisse

Credit Suisse Group AG boosted its forecast for Chinese growth for next year to 8 percent from 7.7 percent, saying that the new leadership will place a higher priority on structural changes in areas such as urbanization and corporate tax cuts.

“I doubt we can reach 8 percent economic growth next year and investors may be more disappointed after the Central Economic Work Conference,” said Jianghai’s Xu, referring to a meeting of top leaders possibly later this month that will set the tone for economic policies in 2013.

Chinese stock investors emptied trading accounts at the fastest pace in 16 months last week.

The number of Chinese stock accounts containing money dropped by 205,000 to 55.6 million, the largest decline since the week ended July 8, 2011, according to regulatory data compiled by Bloomberg. The number of funded accounts slid to the lowest level since the week through Nov. 26, 2010, after reaching a high of 57.28 million in June 2011.

China is scheduled to release November economic data on Dec. 9 including inflation and industrial production. A Bloomberg survey shows that consumer prices quickened to 2.1 percent last month from 1.7 percent in the previous month. Industrial production may have increased to 9.8 percent, compared with a 9.6 percent gain in October, the survey showed.

-- Editors: Allen Wan, Darren Boey

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net;

To contact the editor responsible for this story: Allen Wan at awan3@bloomberg.net

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