China’s Stock-Index Futures Decline as Sinopec May Retreat

China’s stock-index futures fell after the benchmark index retreated for a third day.

Futures on the CSI 300 Index (SHSZ300) expiring in December lost 0.2 percent to 2,390.20 as of 9:18 a.m. local time. China Petroleum & Chemical Corp. (600028), known as Sinopec, may decline after seven people from the refiner were detained after a pipeline explosion. Guangxi-based stocks including Guangxi Wuzhou Zhongheng Group Co. (600252) and Guangxi Fenglin Wood Industry Group Co. may move after the China Securities Journal said the province’s Dongxing city may be allowed to set up a free-trade zone.

The Shanghai Composite Index (SHCOMP) dropped 0.5 percent to 2,186.12 yesterday. The CSI 300 Index slid 0.4 percent to 2,388.63. The Hang Seng China Enterprises Index (HSCEI) retreated 0.5 percent. The Bloomberg China-US Equity Index fell 1.4 percent.

The Shanghai Composite is down 3.7 percent this year and trades at 8.6 times projected profit for the next 12 months, compared with the seven-year average of 15.3, according to data compiled by Bloomberg.

Sinopec, Asia’s biggest oil refiner, may be active. Seven people from the company and two local officials were detained by police after the Nov. 22 explosion in Qingdao, the city’s Huangdao district government said in a posting on its official microblog yesterday. The explosion at the pipeline operated by Sinopec killed 55 people.

Sinopec won’t see any major negative earnings per-share impact from the incident, according to Daiwa Securities Group Inc. While the utilisation rate of Sinopec’s refinery may decline in the near to medium term, the company should have enough refined products stored in its various tank farms to ensure that sales will not be disrupted, Daiwa Securities analysts Adrian Loh and Benjamin Lim wrote in a note dated yesterday. They have a hold rating on the company’s Hong Kong-traded shares.

Free Trade

China may include Dongxing in the free-trade zone trial, the China Securities Journal reported today, without saying where it got the information. Dongxing is the only Chinese city connected by both land and sea with the Asean nations, it said.

China will proactively study and introduce preferred shares, the Shanghai Securities News reported today, citing China Securities Regulatory Commission Vice Chairman Yao Gang speaking at a conference yesterday.

The government will also push forward asset securitization and promote the development of private equity products, according the report.

Chinese equities in the New York fell by the most in two weeks, led by Qihoo 360 Technology Co. (QIHU), on concern revenue growth will slow for the operator of the nation’s second-largest search engine.

Qihoo dropped 9.5 percent, paring its rally this year to 164 percent. Airline stocks trimmed a three-day advance, led by China Southern Airlines Co. Giant Interactive Group Inc. jumped to the highest in five years after receiving a buyout offer.

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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