China’s Stock-Index Futures Drop After IMF Cuts Growth Outlook

China’s stock-index futures fell after the International Monetary Fund cut its forecasts for the nation’s economic growth and warned that a U.S. government default could “seriously damage” the world economy.

Futures on the CSI 300 Index (SHSZ300) expiring in October lost 0.3 percent to 2,435 as of 9:18 a.m. local time. China Yangtze Power Co. (600900), owner of the world’s biggest hydropower project, may drop after its electricity output fell 11 percent in the first nine months. China Vanke Co. may rise as UBS AG said the developer’s sales jumped 29 percent last month from a year earlier.

The Shanghai Composite Index (SHCOMP) climbed 1.1 percent to 2,198.20 yesterday, as retailers and property developers advanced on increased sales during a week-long holiday. Trading volumes in the measure were 13 percent lower than the 30-day average, according to data compiled by Bloomberg. The CSI 300 Index rose 1.4 percent to 2,441.81. The Hang Seng China Enterprises Index (HSCEI) gained 1 percent.

The IMF reduced its forecast for China to 7.6 percent this year in a report released yesterday in Washington, from a 7.8 percent estimate in July, and to 7.3 percent in 2014 from 7.7 percent. The World Bank lowered its estimate for China’s growth a day earlier.

The prospect of higher U.S. long-term interest rates and a partial reversal of capital flows is leaving emerging markets with weak fiscal positions or higher inflation particularly exposed, the fund said.

The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, fell 2.1 percent in New York yesterday as concern grew that a deadlock among U.S. lawmakers over the debt limit could lead to a government default. President Barack Obama reiterated yesterday that he won’t negotiate with Republicans over the partial government shutdown and the U.S. debt limit.

U.S. Shutdown

The Shanghai Composite trades at 8.7 times projected earnings for the next 12 months, compared with the five-year average of 12.6 times, according to data compiled Bloomberg. The index has climbed 13 percent from this year’s low on June 27 as Shanghai-based companies jumped on speculation they will benefit from deregulation in the city’s free-trade zone.

China’s economy has “strong momentum” as major economic indicators have rebounded since July, the Xinhua News Agency cited Premier Li Keqiang as saying in a written interview with media from Asean nations.

The government will start to release September economic data as early as this week. The central bank may release reports on money supply and new lending as early as today, while the customs office is scheduled to provide foreign-trade data on Oct. 12.

--Zhang Shidong. Editors: Allen Wan, Richard Frost

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

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

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