Most Chinese Stocks Fall as Liquor, Drug Shares Drop on Earnings

Most Chinese stocks fell as disappointing earnings at liquor and health-care companies overshadowed gains for energy shares. The benchmark index was little changed after price swings approached a two-month high.

Wuliangye Yibin Co. (000858), the nation’s second-largest liquor maker, and Yunnan Baiyao Group Co., a producer of Chinese medicine, both slid at least 6.8 percent after reporting third-quarter results. China Oilfield Services Ltd. (601808) jumped 7.4 percent after the company said nine-month earnings rose 40 percent.

The Shanghai Composite Index added 0.9 point to 2,133.87 at the close, with 473 stocks falling and 446 gaining, after changing directions at least 16 times. Earnings at the 388 companies in the gauge tracked by Bloomberg that reported results so far this quarter have trailed analyst estimates by 1.2 percent. Chinese Politburo member Yu Zhengsheng said reforms to be discussed at a Communist Party meeting next month will be “unprecedented,” according to an Oct. 26 report by Xinhua News Agency that didn’t mention specific policies.

“The market is likely to remain weak,” said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu. “We have a lot of expectations for more reforms in November but investors will need concrete announcements to boost the market forward.”

The CSI 300 Index lost 0.1 percent to 2,365.95. The Hang Seng China Enterprises Index (HSCEI) of mainland companies traded in Hong Kong climbed 0.9 percent. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, fell 1.2 percent in New York on Oct. 25.

Volatility Increases

The Shanghai index has fallen 6 percent this year on concerns a slowing economy will hurt profit growth and the government will introduce measures to curb gains in property prices. Trading volumes were 41 percent below the 30-day average today, while 30-day volatility was at 19.6, after hitting a two-month high on Oct. 25, according to data compiled by Bloomberg. It trades at 8.4 times projected profits for the next 12 months, compared with the seven-year average of 15.4.

Wuliangye Yibin declined 6.8 percent, the biggest drop since Dec. 3. Net income fell about 52 percent from a year earlier as sales tumbled 40 percent, the company said. Yunnan Baiyao sank 7.7 percent to the lowest level since Aug. 15.

China Oilfield climbed for a second day, extending this year’s gain to 34 percent. China Life Insurance Co. and Ping An Insurance (Group) Co, the nation’s largest insurers, both advanced 1 percent as stock-market gains lifted third-quarter profits.

Reform Pledges

Zoomlion Heavy Industry Science & Technology Co. (000157) jumped 6.2 percent to 5.79 yuan after a Chinese daily newspaper apologized for publishing unverified stories questioning the finances of the construction-machinery manufacturer.

Xinkuaibao apologized for failing to verify stories by its reporter Chen Yongzhou, following a report aired by state-run China Central Television on Oct. 27 that showed footage of Chen being interrogated by police in Changsha.

China’s leaders have pledged to cut the state’s role in the economy, change the financial and fiscal systems, and overhaul land and household registration rules to sustain growth. Analysts surveyed by Bloomberg News this month said policies flowing from the meeting, called the third plenum, will reduce the odds of a severe slowdown and help China become a high-income country by 2030.

The iShares China Large-Cap ETF, the largest Chinese exchange-traded fund in the U.S., slipped 0.1 percent to $36.43 in New York on Oct. 25, for a weekly decline of 4.5 percent.

To contact the reporter on 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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