China’s Stock Futures Drop After PMI Gauge Misses Estimates

China’s stock-index futures fell, signaling declines for the benchmark index, after a manufacturing gauge missed economist estimates.

Futures on the CSI 300 Index (SHSZ300) expiring in April lost 0.9 percent to 2,470.60 as of 9:20 a.m. local time. The Purchasing Managers’ Index was 50.9 in March, the National Bureau of Statistics and China Federation of Logistics and Purchasing said today in Beijing. That compares with 50.1 in February and the 51.2 median estimate of 26 analysts surveyed by Bloomberg News. Readings above 50 indicate expansion.

The Shanghai Composite Index (SHCOMP) advanced less than 0.1 percent to 2,236.62 on March 29. The CSI 300 Index declined 0.2 percent to 2,495.08. Hong Kong’s market was shut on March 29 for a public holiday and is closed today as well.

“The PMI indicates the recovery is going on but the strength is a bit weaker than expected,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages $120 million. “The current stock prices have already priced in the weak economic recovery. If we need the market to rise again, we’ll need to see something exceeding expectations.”

The Shanghai index dropped 1.4 percent this year amid concern steps to cool property prices will drag on economic growth and as company earnings trailed estimates. It is valued at 9.1 times projected 12-month earnings, the lowest level since December and less than the seven-year average of 15.8, according to data compiled by Bloomberg.

Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. (600111), China’s biggest producer of rare earth, may decline after profit fell 57 percent last year. Health-care stocks may move after health officials said two people died and one other is ill with bird flu.

Property Curbs

Developers may be active today. China’s largest cities, including Beijing and Shanghai, tightened rules on home purchases after the nation asked local governments to step up efforts to cool the property market.

Beijing banned single-person households from buying more than one residence while Shanghai prohibited banks from giving credit to third-home buyers, according to the local administration websites. The two cities will also enforce a 20 percent tax on capital gains from property sales.

Detailed property curbs, especially in second-tier cities, are much milder than expected, Jinsong Du, an analyst at Credit Suisse Group AG, wrote in a report dated yesterday. Housing prices will remain strong in the near term and property stocks may have a near-term rally, according to the report.

Pharmaceutical stocks may move today. Three cases of infection with H7N9 avian influenza have been diagnosed in Shanghai and Anhui provinces, and two of the victims died, the National Health and Family Planning Commission said yesterday.

Of the 281 companies in the Shanghai Composite that have released full-year earnings results, 64 percent missed analysts’ estimates, according to data compiled by Bloomberg. Chinese listed companies are required to release annual and first- quarter reports by the end of April.

--Zhang Shidong. Editors: Darren Boey, Chan Tien Hin

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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