Chinese stocks fell for the first time in four days as losses in materials and power producers overshadowed gains by automakers.
Zijin Mining Group Co. (601899) slid 1.6 percent after posting its lowest first-half profit since 2006. Huaneng Power International Inc. and China Yangtze Power Co. paced declines by electricity suppliers. SAIC Motor Corp. (600104) gained 1.7 percent and FAW Car Co. jumped 4.2 percent after Brilliance China Automotive Holdings Ltd. reported higher earnings.
The Shanghai Composite Index (SHCOMP) retreated 0.3 percent to 2,100.14 at the close. The gauge climbed 3 percent over the past three days after new yuan loans topped estimates, money supply unexpectedly accelerated and industrial output improved. China will accelerate efforts to cull excess industrial production, an official said yesterday.
“While there’s expectations about a rebound in the economy, there’s still some doubt about its sustainability,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “There’s limited room for the market to go up.”
The CSI 300 Index lost 0.4 percent to 2,349.08. Hong Kong markets are closed today due a typhoon.
Trading volumes in the Shanghai Composite were 18 percent higher than the 30-day average, according to data compiled by Bloomberg. The index is valued at 8.5 times 12-month projected earnings, compared with the five-year average of 12.7 times, data compiled by Bloomberg show.
A measure of material stocks dropped 1.3 percent, the most among the 10 industry groups. Zijin Mining fell to 2.53 yuan. First-half net income declined to 1.1 billion yuan ($180 million) from 2.4 billion yuan a year earlier amid falling bullion and copper prices and higher production costs.
The government will complete by the end of 2014 its overcapacity reduction plan for the five years through 2015, and will seek to cut further outdated capacity, China National Radio said yesterday, citing Industry Minister Miao Wei.
Huaneng Power, the listed unit of China’s largest power group, fell 1.4 percent to 5.71 yuan. China Yangtze Power, owner of the world’s biggest hydropower project, lost 1.2 percent to 6.88 yuan.
SAIC Motor climbed 1.7 percent to 13.90 yuan, its highest close since June 18. FAW Car, which makes passenger cars in China with Volkswagen AG, jumped to 14.74 yuan. Anhui Jianghuai Automobile Co. (600418), a unit of China’s biggest light-truck exporter, added 1.6 percent to 8.42 yuan.
Brilliance China, a partner of Bayerische Motoren Werke AG, said first-half profit surged 52 percent from a year earlier on demand for new models including its 5-series sedan in the world’s largest auto market.
A gauge of technology shares jumped 1.3 percent to its highest level since August 2011. Yonyou Software Co. climbed 7.5 percent to 12.62 yuan. Tsinghua Tongfang Co. (600100) added 5.4 percent to 8.40 yuan.
Yonyou offers small-cap exposure to investors at relatively lower valuations than ChiNext start-up companies, Zhang Yingjuan, an analyst at Industrial Securities Co., said by phone today.
The ChiNext Index of small-company stocks rose 0.7 percent. The gauge has diverged from the Shanghai Composite this year as the government promotes new technologies and seeks to reduce the economy’s reliance on credit-fueled construction spending.
The ChiNext, which has a 24 percent weighting in technology stocks, has surged 65 percent this year. The Shanghai gauge, with a 44 percent weighting in financial and materials stocks, slid 7.5 percent.
“The new government has felt it urgent to transform the structure of the economy by reducing the reliance on loan-driven investment and bolstering the development of new industries,” said Wang Weijun, a strategist in Shanghai at Zheshang Securities Co. “Investors have sensed the change and what we’ve seen so far is optimism that this will be successful.”
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at firstname.lastname@example.org