Most China Stocks Fall as Zoomlion Leads Industrial Shares Lower

Most Chinese stocks fell as declines for industrial companies and utilities overshadowed gains by liquor makers.

Zoomlion Heavy Industry Science and Technology Co. sank 3.2 percent as it denied a Ming Pao Daily report questioning the company’s sales. Huaneng Power International Inc. (600011) slid 3.7 percent as utility valuations traded near a four-month high. Ping An Insurance (Group) Co. (601318) fell after the South China Morning Post said the government is poised to reject HSBC Holdings Plc’s sale of a stake in the company. Kweichow Moutai Co. (600519) led a consumer-staples index to the highest since November.

About five stocks dropped for every four that gained in the Shanghai Composite Index (SHCOMP), which fell less than 0.1 percent to 2,275.34 at the close after changing directions at least 20 times. The CSI 300 Index (SHSZ300) rose less than 0.1 percent to 2,526.13.

“Some investors are taking profits from the market as the rally has already generated good returns for them,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages $120 million. “The correction will be mild and the market will come back amid the backdrop of an economic recovery.”

The Shanghai Composite has surged 16 percent from an almost four-year low on Dec. 3, while the CSI 300 has climbed 19.8 percent, on signs economic growth is picking up. The Shanghai gauge trades at 12.6 times reported earnings, approaching the highest level since June, according to daily data compiled by Bloomberg since 2006.

Economic Data

Trade figures tomorrow may show export growth accelerated to 5 percent in December from 2.9 percent the previous month, while a Jan. 11 report may indicate inflation quickened to 2.3 percent, according to economist surveys by Bloomberg. New yuan loans probably dropped 14 percent last month from a year earlier, data due by Jan. 15 may show.

Average trading volumes in the Shanghai Composite were up 25 percent from the 30-day average. The index’s 14-day relative strength index, measuring how rapidly prices have advanced or dropped during a specified time period, was at 74.5 today. Readings above 70 indicate a price may be poised to fall, according to some traders.

The Hang Seng China Enterprises Index climbed 0.9 percent today. The Bloomberg China-US 55 Index (CH55BN), the measure of the most- traded U.S.-listed Chinese companies, fell 1.2 percent in New York yesterday.

The possibility of a cut in the reserve-requirement ratio is increasing for January as reverse-repurchase agreements mature this month, the official Xinhua News Agency reported yesterday, citing “most industry insiders” it didn’t identify.

Accounting Concern

Zoomlion, the nation’s second-biggest maker of construction equipment, sank 3.2 percent, the most since Nov. 8, to 8.90 yuan. Allegations about its financial results detailed in Ming Pao’s report were “false, groundless and misleading,” the company said in a statement yesterday.

Its American depositary receipts dropped the most in two weeks in New York.

The iShares FTSE China 25 Index Fund, the largest Chinese ETF in the U.S., slid 1.8 percent yesterday, the most since Nov. 8, on renewed concern over corporate accounting practices. Liu Xinhua, vice chairman of the China Securities Regulatory Commission, urged more crackdowns on accounting firms’ violations, the China Securities Journal reported today.

A gauge of utility companies slid 1.3 percent today, the biggest decline for CSI 300’s industry groups. The index is valued at 16.2 times reported earnings, near the highest level since August, according to data compiled by Bloomberg.

Stake Sale

Huaneng Power, the listed unit of China’s largest power group, slumped 3.7 percent to 6.85 yuan. Huadian Power International Corp. (600027), the listed unit of the fourth largest, slid 1 percent to 3.81 yuan.

Ping An, China’s second-biggest insurer, lost 0.9 percent to 45.07 yuan. The insurance regulator is poised to reject Charoen Pokphand Group’s proposed $9.4 billion purchase of HSBC’s stake in Ping An on concerns the group may not be able to fund the acquisition, the South China Morning Post reported. Two calls to the regulator’s office weren’t returned.

A measure of consumer-staples stocks in the CSI 300 gained 2.1 percent to the highest level since Nov. 14. Kweichow Moutai, China’s biggest producer of baijiu liquor by market value, climbed 2.7 percent to 216.45 yuan. The company cut supply quotas to some retailers by 30 percent after they lowered prices, spokeswoman Li Hongfang said by phone today.

Wuliangye Yibin Co. (000858), the second largest producer, added 1.8 percent to 28.63 yuan. Jiangsu Yanghe Brewery Joint-Stock Co. jumped 7.4 percent to 102.94 yuan.

A gauge of energy stocks advanced 2.1 percent, the most among the CSI 300’s 10 industry groups, on government plans to add 49 gigawatts of renewable-energy capacity this year.

Beijing Jingyuntong Technology Co. (601908), a maker of photovoltaic equipment, gained 4.7 percent to 6.66 yuan. Sungrow Power Supply Co., a manufacturer of solar inverters, advanced 4.2 percent to 9.64 yuan.

--Zhang Shidong. Editors: Allen Wan, Darren Boey

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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