China’s stocks dropped, paring a weekly gain, before reports on industrial output and retail sales. Property developers and smaller companies led declines.
China Vanke Co. (000002) and Poly Real Estate Group Co. led losses for developers after the China Securities Journal reported the government may expand a property tax trial to as many as six cities. The ChiNext index of small companies slumped 2.7 percent after valuations approached the highest levels in two years. Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. (600111) climbed 9.4 percent on speculation a government crackdown on illegal mining of rare earth will boost prices.
The Shanghai Composite Index (SHCOMP) dropped 0.6 percent to 2,032.24 at the 11:30 a.m. break, trimming this week’s gain to 0.1 percent. Data on industrial production, fixed-asset investment and retail sales are due at 1:30 p.m. A report earlier showed consumer prices rose at a slower-than-estimated pace in July, while producer prices fell for a 17th month.
“The economic data didn’t surprise investors,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “The decline in small-caps hurt sentiment a lot as they are among the best performers this year. The correction has just started because valuations are too high.”
The ChiNext has risen 62 percent this year, compared with a 10 percent drop for the Shanghai index.
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at email@example.com