Most Chinese stocks retreated on the first trading day of the year, led by consumer shares and health-care companies, after valuations increased to their highest levels in 13 months.
Tasly Pharmaceutical Group Co. slumped 6.7 percent from a 14-month high. Kweichow Moutai Co., the largest maker of spirits, slid 1 percent. A private survey showed services industries grew at the slowest pace in 16 months in December. Ping An Insurance (Group) Co. paced gains by insurers.
About two stocks declined for each that rose on the Shanghai Composite Index, which added 0.4 percent to 2,276.99 at the close. The CSI 300 Index (SHSZ300) advanced 0.1 percent to 2,524.41 after briefly rallying more than 20 percent from last year’s low. The Hang Seng China Enterprises Index (HSCEI) sank 1 percent after Federal Reserve policy makers said they will probably end debt purchases that have fueled demand for riskier assets.
Companies in the CSI 300 trade at an average 12.1 times estimated earnings, the highest valuation in 13 months. That compares with a multiple of 9 for the Hang Seng China Enterprises Index.
The CSI 300’s 14-day relative strength index rose to 78.12 on Dec. 31, according to data compiled by Bloomberg. The RSI measures how rapidly prices have advanced or declined during the specified time period. Some analysts see a reading of more than 70 as a signal to sell.
The CSI 300 has gained 19.7 percent from its Dec. 3 low. An advance of a 20 percent or more from a low signals a bull market to some investors, while a decline of that magnitude signals a bear market.
The CSI 300’s last bull-market rally began in July 2010 and lasted until November that year with the stock gauge jumping 41 percent. The index entered a bear market in August 2011 as the government raised interest rates and ordered banks to set aside more funds as deposit reserves to slow inflation.
The Hang Seng China gauge climbed 4.8 percent in Hong Kong during the previous two days, while the Bloomberg China-US Equity Index of the most-traded Chinese shares in New York rose 2.2 percent, amid speculation the economy is rebounding from its seven-quarter slowdown.
The consumer-staples index declined 0.9 percent, led by Kweichow Moutai’s 1 percent drop to 206.94 yuan.
The services Purchasing Managers’ Index released by HSBC Holdings Plc and Markit Economics today fell to 51.7 from 52.1 in November. At the same time, companies added workers at the fastest pace in more than two years and were “optimistic” business would improve, HSBC said in a statement.
China’s gross domestic product probably expanded 7.8 percent in the fourth quarter from a year earlier, from a three- year low of 7.4 percent in the previous three months, according to the median estimate of 34 economists surveyed by Bloomberg last month. The GDP data is scheduled for Jan. 18.
Chinese insurers gained after surging on the Hong Kong gauge since Dec. 30, when the nation’s securities regulator said they will be allowed to set up mutual funds. Ping An jumped 4 percent to 47.11 yuan. China Pacific Insurance (Group) Co. advanced 2 percent to 22.96 yuan.
Trading volumes in the Shanghai Composite were 55 percent higher than the 30-day average at the close, according to data compiled by Bloomberg.
The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., declined 0.6 percent to $41.59 in New York yesterday, after climbing 3.5 percent Jan. 2. The Standard & Poor’s 500 Index (SPX) fell 0.2 percent to 1,459.37.
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