China Stocks Fall From One-Month High as New Loans Miss Estimate

China’s stocks fell, dragging the benchmark index down from a one-month high, after new yuan lending missed economists’ forecasts.

Bank of Communications Co. dropped 1.1 percent and Poly Real Estate Group Co. sank 2.1 percent from its highest close in almost five months. Kweichow Moutai Co. (600519), China’s biggest producer of baijiu liquor by market value, advanced 1.8 percent after saying its products meet government requirements.

The Shanghai Composite Index (SHCOMP) slid 0.4 percent to 2,074.70 at the close, after rising yesterday to the highest level since Nov. 7. The CSI 300 Index lost 0.6 percent to 2,258.50. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong slipped 0.2 percent. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, added 0.5 percent yesterday.

“The market needs to take a breather here after a decent rally as some investors are doubtful about the magnitude of the economic recovery based on the loan data,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “The market will probably continue to go up after the consolidation given recent positive signs that the economy is bottoming out.”

November factory output and retail sales data released on the weekend beat economists’ estimates. Signs the economic recovery is gathering momentum helped drive the Shanghai Composite up by 6.3 percent through yesterday from Dec. 3, when it closed at its lowest level since January 2009.

Trading Volumes

The Shanghai gauge is still down 5.7 percent this year, the most among benchmark indexes in Asia’s largest stock markets. The measure trades at 11.4 times reported earnings, compared with 10.8 set on Dec. 3, the lowest level since at least 1997, data compiled by Bloomberg show.

Shanghai Composite trading volumes were about 46 percent higher than the 30-day daily average. Thirty-day volatility on the gauge was at 16.8, compared with this year’s average of 16.9, data compiled by Bloomberg show.

Bank of Communications sank 1.1 percent to 4.43 yuan. China Minsheng Banking Corp., the nation’s first privately owned bank, lost 1.7 percent to 6.90 yuan. Industrial Bank Co., part-owned by a unit of HSBC Holdings Plc, fell 1 percent to 14.04 yuan.

Banks extended 522.9 billion yuan ($84 billion) of local- currency loans last month, the central bank reported today. That compares with a 550 billion yuan median estimate in a Bloomberg News survey of economists and 562.2 billion yuan in November last year. Aggregate financing, an indicator designed to capture other funding sources apart from the bank loans, was 1.14 trillion yuan in November, the lowest level since August.

Stock Rebound

A gauge of the Shanghai Composite’s property companies sank 1.3 percent, snapping an 11 percent rally in the past seven days. Poly Real Estate, China’s second-largest developer by market value, lost 2.1 percent to 12.14 yuan. China Vanke Co. (000002), the biggest, dropped 1.1 percent to 9.24 yuan.

The Chinese stock market will likely rebound early next year because of stabilizing economic fundamentals and ample liquidity, the China Securities Journal said in a commentary.

Xi Jinping, newly elected head of the Communist Party, said the nation shouldn’t delay pushing for economic restructuring, the official Xinhua News Agency reported yesterday, citing the comments he made at a seminar in the southern city of Guangzhou on Dec. 9.

Kweichow Moutai gained 1.8 percent to 202.31 yuan after being suspended from trading yesterday. Product samples it sent to three labs this year met government requirements, the liquor maker said in a statement. Concerns over the levels of additives in its products dragged the company’s shares down by 8 percent last week.

Moutai led a gauge of consumer-staples companies in the CSI 300 (SHSZ300) to a 0.5 percent advance. The sub-index posted the biggest advance among the CSI 300’s 10 industry groups today.

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., added 0.9 percent to $38.77 in its fifth day of gains yesterday, the longest stretch of increases since Oct. 18.

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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