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China Stocks Drop as Everbright Securities, Material Shares Fall

Chinese stocks fell as commodity producers declined and Everbright Securities Co. plunged by the 10 percent daily limit. Railway companies advanced.

Everbright Securities’ shares traded for the first time since erroneous buy orders roiled the nation’s equities last week. Jiangxi Copper Co. the nation’s largest producer of the metal, slid 2.8 percent to a three-week low and PetroChina Co. lost 1.1 percent as metal and oil prices declined. Daqin Railway Co. and Guangshen Railway Co. rose more than 1.6 percent after the government said it plans to boost spending on railroads.

The Shanghai Composite Index (SHCOMP) fell 0.6 percent to 2,072.59 at the close. The Hang Seng China Enterprises Index slumped 3.4 percent in Hong Kong, heading for its biggest loss in 18 months. Shares dropped across Asia amid concern a reduction of stimulus by the U.S. Federal Reserve will spur outflows from the region.

“It’s not the end of the saga for Everbright yet,” said said Zhang Gang, a strategist at Central China Securities Holdings Co. in Shanghai. “Confidence is low.”

The CSI 300 Index lost 0.8 percent to 2,312.47, while the MSCI Asia Pacific Index sank 1.8 percent. The Federal Reserve, which will publish minutes of its July meeting tomorrow, will probably start reducing bond purchases in September, according to 65 percent of economists surveyed by Bloomberg.

The Shanghai Composite has tumbled about 40 percent from its August 2009 high, erasing about $644 billion in market value, as the world’s second-largest economy slowed and local investors emptied more than 2 million equity trading accounts.

Everbright Securities dropped to 10.91 yuan. The China Securities Regulatory Commission banned the state-controlled brokerage from proprietary trading for three months after 23.4 billion yuan ($3.8 billion) of erroneous buy orders on Aug. 16. Everbright also said yesterday it mispriced 10 million yuan of government bonds.

Trading System

Haitong Securities Co. (600837) slumped 3.3 percent to 10.63 yuan. The brokerage is looking into media reports of a trading system problem, Board Secretary Jin Xiaobin said by phone. Some Haitong clients weren’t able to sell shares of Sinopec Shanghai Petrochemical Co. and Sinopec Yizheng Chemical Fibre Co. this morning when the two firms resumed trading after restructuring, China.com.cn reported.

A gauge tracking material producers lost 1.8 percent, the most among the 10 industry groups. Jiangxi Copper fell to 16.75 yuan. Tongling Nonferrous Metals Group Co. slumped 2.9 percent to 11.44 yuan. Copper, zin and tin slid at least 0.6 percent in London, while crude dropped 0.9 percent in New York.

Oil, Rail

PetroChina retreated 1.1 percent to 7.96 yuan. Shanxi Lu’an Environmental Energy Development Co. tumbled 3.5 percent to 13.09 yuan.

Daqin Railway increased 4.5 percent to 6.93 yuan. Guangshen Railway added 1.7 percent to 2.47 yuan. The government said yesterday it plans to invest more than originally planned on railroads this year.

Separately, central bank Governor Zhou Xiaochuan told China Central Television yesterday the government will increase financial support to the economy, while the main economic indicators are within an expected range. Premier Li Keqiang said China should improve the quality, efficiency and consistency of growth, CCTV reported.

To contact Bloomberg News staff for this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

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