China’s benchmark stock index fell in its longest losing streak in three months as the country’s industrial output had the weakest start to a year since 2009 and lending and retail sales growth slowed.
Industrial Bank Co. (601166) led lenders lower after the nation’s new loans last month trailed analyst estimates. Liquor maker Sichuan Swellfun Co. dropped among consumer companies after the country’s retail sales growth in the first two months was the smallest for that period since 2004. China Vanke Co. (000002) and Poly Real Estate Group Co. advanced at least 1.4 percent as property sales jumped this year.
“The economic recovery is weaker than expected,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages $120 million. “Investors are worried that stocks may already have moved ahead of fundamentals.”
The Shanghai Composite Index (SHCOMP) dropped 0.4 percent to 2,310.59 at the close, trimming its gain since last year’s Dec. 3 low to 18 percent. The CSI 300 Index (SHSZ300) declined 0.6 percent to 2,592.37. The Hang Seng China Enterprises Index (HSCEI) slipped 0.1 percent in Hong Kong. The Bloomberg China-US 55 Index (CH55BN) rose 1 percent in New York on March 8.
The Shanghai index retreated 1.7 percent last week on concerns the government will tighten monetary policy and regulators will allow the resumption of initial public offerings. It remains up 1.8 percent this year.
Industrial production climbed 9.9 percent in the first two months and retail sales rose 12.3 percent, the statistics bureau said over the weekend, trailing economists’ estimates. New local-currency loans in February fell to 620 billion yuan ($99.6 billion), the People’s Bank of China said, less than the estimates of 27 out of 28 analysts in a Bloomberg News survey.
Industrial Bank, part-owned by a unit of HSBC Holdings Plc, retreated 3.2 percent to 19.09 yuan. Ping An Bank Co. slid 1 percent to 22.63 yuan, adding to a two-day, 5.7 percent loss. China Minsheng Banking Corp. (600016), the nation’s first privately owned bank, lost 3.2 percent to 10.22 yuan.
A gauge tracking consumer-staples shares slumped 0.4 percent, the third most among the CSI 300’s 10 industry groups. Sichuan Swellfun, the Chinese liquor maker that’s a partner of Diageo Plc, declined 1.9 percent to 17.70 yuan. Wuliangye Yibin Co., China’s second-biggest liquor maker by market value, fell 1.2 percent to 24.50 yuan.
The moderation in retail sales follows a crackdown by new Communist Party chief Xi Jinping on lavish spending by government officials and state-owned companies, part of efforts to curb corruption and waste.
Fixed-asset investment increased by higher-than-estimated 21.2 percent in January and February, while consumer prices climbed a more-than-estimated 3.2 percent in February from a year earlier. Standard Chartered Plc estimates inflation will average 4 percent this year, compared with the government’s target of 3.5 percent.
The Shanghai Composite is valued at 9.5 times earnings for the next 12 months, compared with a five-year average of 13.5, according to data compiled by Bloomberg. Trading volumes were 34 percent lower than the 30-day average and 30-day volatility dropped to the lowest in a week, Bloomberg data showed.
A measure of property stocks in the Shanghai Composite rose 1 percent. Vanke, the nation’s biggest listed property developer, rose 1.4 percent to 11.11 yuan. Poly Real Estate, the second largest, gained 1.7 percent to 11.57 yuan.
Property sales jumped 78 percent in the January-to-February period while real-estate investment climbed 23 percent, the statistics bureau said.
Guangshen Railway Co. (601333) gained 1.9 percent to 3.26 yuan as Barclays Plc said the government’s plan to dismantle the railway ministry will benefit industry stocks through reduced bureaucracy and increased participation of private capital. Daqin Railway Co., the operator of China’s biggest coal transport network, added 0.8 percent to 7.77 yuan.
The Ministry of Railways will be split into two, according to a report signed by Premier Wen Jiabao delivered to the National People’s Congress in Beijing. Some functions will be put into a State Railway Administration under the Ministry of Transportation. A new company, China Railway Corp., will take over commercial operations, according to the plan.
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