Most Chinese Stocks Fall After March Trade Data; Drugmakers Drop

Most Chinese stocks fell, led by health-care companies, after exports rose less than forecast.

Shijiazhuang Yiling Pharmaceutical Co. slid 6.2 percent as Bank of America Corp. said the bird flu will have limited effects. Gree Electric Appliances Inc., the biggest air- conditioner maker, dropped the most since November 2010. Kweichow Moutai Co. paced gains for liquor makers on speculation the government may announce new industry standards.

Five stocks fell for every four that gained on the Shanghai Composite Index (SHCOMP), which rose less than 0.1 percent to 2,226.13 at the close. The gauge’s 100-day volatility held near a one-year high after swinging between gains and losses at least 13 times. The CSI 300 Index (SHSZ300) slid 0.2 percent to 2,485.31.

“The export data was weaker and combined with the poor producer-price report yesterday are leading to some concern about economic growth,” Tang Yonggang, an analyst at Hongyuan Securities Co. in Beijing, said by phone today. “Many investors are now on the sidelines.”

A government report showed exports grew 10 percent in March, compared with 21.8 percent growth in February and the 11.7 percent median estimate of economists. Import growth exceeded analyst estimates, leaving an unexpected trade deficit.

The Shanghai index has fallen 8.6 percent from a Feb. 6 high amid concern steps to cool property prices will drag on economic growth. The gauge’s trading volume was 24 percent lower than the 30-day average today, according to data compiled by Bloomberg.

Export Outlook

Valuations on the Shanghai gauge dropped to 9.1 times projected 12-month earnings, near the lowest level since Dec. 13 and less than the seven-year average of 15.8, data compiled by Bloomberg show. The Hang Seng China Enterprises Index advanced 0.2 percent. The Bloomberg China-US Equity Index (CH55BN) rose 1.3 percent in New York yesterday.

China’s exports climbed less than estimated for the first time in four months, leaving the world’s second-largest economy with weaker global demand to support a recovery than previous figures indicated.

Imports rose by an above-forecast 14.1 percent in March, leaving an unexpected trade deficit of $880 million, the customs administration said today in Beijing.

Investors shouldn’t get too pessimistic over China’s slowing export growth given distortions in the previous two months, Bank of America’s China economist Ting Lu wrote in a report today.

Slowing Growth

Another government report yesterday showed producer prices fell 1.9 percent in March, the 13th straight decline, while consumer prices rose 2.1 percent, less than the 2.5 percent median estimate of 38 analysts surveyed by Bloomberg.

BHP Billiton Ltd., the world’s biggest mining company, expects annual economic growth in China to moderate to 6 percent, saying prospects in its largest customer present its main risk.

“What you have seen over the last couple of years, I don’t expect the double digit growth rates to continue,” Graham Kerr, chief financial officer of the Melbourne-based company, said today at the Bloomberg Australia Economic Summit in Sydney. “Their moderated growth is around the 7 percent to 8 percent mark for the next couple of years, then trending down toward the 6 percent mark.”

Gree Electric slumped the most among consumer companies reliant on economic growth, losing 5.8 percent to 27.12 yuan, the most since November 2010.

Fitch Ratings Ltd. cut China’s long-term local-currency debt rating, citing increasing risks to the country’s financial stability given the lack of transparency in the increased borrowing of local governments.

Bird Flu

Fitch lowered the rating to A+, its fifth-highest level, from AA-, the fourth-highest, the company said in an e-mailed statement yesterday. The company estimates total credit in China’s economy, including various forms of so-called shadow banking, may have reached 198 percent of gross domestic product at the end of 2012, up from 125 percent at end-2008.

A gauge of drugmakers in the CSI 300 fell 2 percent, the most among 10 industry groups. Shijiazhuang Yiling slumped 6.2 percent to 27.66 yuan, while Yunnan Baiyao Group Co. dropped 1.8 percent to 81.50 yuan.

China’s government is pledging openness in divulging details of a deadly bird flu outbreak, saying it won’t repeat mistakes made during the SARS outbreak a decade ago that delayed response to the global contagion.

Any doctors who fail to disclose cases promptly and accurately will be prosecuted, Liang Wannian, an official at China’s National Health and Family Planning Commission, told reporters yesterday. The briefing came in response to an escalation in reported infections as the death toll rose to 9.

Consumer Staples

The bird flu’s negative impact on the market is expected to be muted and short-lived, Bank of America analysts Tracy Tian and David Cui wrote in a report. It will be a “non-event” if there is no human-to-human transmission of the virus, they said.

A gauge of consumer-staples stocks surged 1.7 percent, the biggest gain among the CSI 300 groups. Kweichow Moutai, the largest maker of baijiu liquor, climbed 3.9 percent to 169.96 yuan. Wuliangye Yibin Co., the second-biggest producer, gained 4.6 percent to 22.76 yuan.

The government may announce a new standard for the use of the chemical plasticizer in the liquor industry, removing some uncertainty, Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai, said by phone today.

Liquor makers also gained after they underperformed the broader market, he said. The consumer-staples gauge traded at 12.2 times projected 12-month earnings this week, rebounding from a record low of 11.8 times last week.

The iShares FTSE China 25 Index Fund (FXI), the largest Chinese exchange-traded fund in the U.S., jumped 1.7 percent in New York, the steepest one-day rally since March 20.

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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