China’s stocks fell as coal companies slumped after Shanghai reported record-high levels of pollution, while financial shares slid before trade data this weekend. Environmental-protection stocks rose.
China Shenhua Energy Co., the biggest coal producer, and a a gauge of energy shares dropped the most in two weeks as Masterlink Securities Corp. said worsening pollution may spur a shift away from fossil fuels. Citic Securities Co. and Haitong Securities Co., the two largest brokerages, sank more than 2 percent after rallying earlier this week on regulators’ plan to resume initial public offerings. Fujian Longking Co., which makes pollution control equipment, advanced 0.8 percent.
The Shanghai Composite Index (SHCOMP) slipped 0.4 percent to 2,237.11 at the close, paring this week’s gain to 0.8 percent. Trade data scheduled for Dec. 8 will probably show China’s exports rose in November from the previous month.
“There’s uncertainty before data so there’s a lack of confidence to drive the index higher,” said Zhang Yanbing, analyst at Zheshang Securities Co. in Shanghai. “The pollution is worse today. This is good for environmental stocks.”
The CSI 300 Index fell 0.6 percent to 2,452.29. The Hang Seng China Enterprises Index slipped 0.1 percent. The ChiNext index of small-cap stocks rose 0.4 percent, paring this week’s decline to 12 percent.
China’s exports probably gained 6.5 percent in November, compared with a 5.6 percent advance in the previous month, according to a Bloomberg survey of 29 economists. Consumer-price inflation probably slowed to a 3.1 percent rate last month, compared with 3.2 percent in October, according to economists’ median estimates.
Industrial output probably remained unchanged at 9.7 percent in November from the previous month. Data on CPI and industrial output are scheduled for release on Dec. 9 and 10 respectively.
“We expect November activity data to show slower growth in industrial production and fixed asset investment,” Barclays Plc economist Jian Chang wrote in a report. “Export growth could pick up in November, but mainly due to favorable base effects.”
A measure of energy producers in the CSI 300 slid 1.4 percent, the second most among 10 industry groups. China Shenhua, the biggest coal producer, dropped 0.9 percent to 17.05 yuan. Yanzhou Coal Mining Co. fell 1 percent to 10.10 yuan.
“Bad pollution in Shanghai recently prompted investors to be concerned if there would be changes to energy use in future,” Li Xin, an analyst at Masterlink Securities, said by phone in Shanghai today.
A heavy fog shrouding Shanghai caused widespread flight cancellations as the worst pollution levels since government monitoring prompted the city to order vehicles off the road and factories to cut production.
The city’s air quality index jumped to 503 by 2 p.m., putting it in the “beyond index” category, the U.S. consulate in Shanghai said on its website. The Shanghai government said air quality surged to the “severe” category, the highest in a six-tier rating system, according to its own monitoring system.
Fujian Longking paced gains for environmental protection companies, rising 0.8 percent to 35.46 yuan. Yonker Environmental Protection Co. added 0.7 percent to 27.34 yuan.
Shanghai Waigaoqiao Free Trade Zone Development Co. dragged down a gauge of property companies, losing 3.8 percent to 36.88 yuan. The shares had gained 12 percent over a three-day rally after the central bank said it plans to implement reform measures for the city’s trade zone within three months.
Shanghai-based companies have led the index’s 15 percent rally from a four-year low in June as the government approved the zone as part of a wider package of economic reforms announced last month. Chinese leaders are expected to provide more details on new economic policies and unveil growth targets at a conference this month.
Haitong Securities, the second-biggest listed brokerage, fell 3.8 percent to 11.94 yuan. Citic Securities, the largest-listed brokerage, slumped 2.6 percent to 13.10 yuan. They both reported yesterday that net income fell last month.
China’s move to end a 14-month ban on IPOs and allow the sale of preferred shares led to a rally in financial stocks earlier in the week as investors bet the measures will boost fees for brokerages and ease banks’ funding.
Hermes Fund Managers Ltd., which beat 88 percent of its emerging-market peers this year, is boosting holdings of Chinese stocks after the government pledged to open up the economy to more investment to fuel growth.
Hermes has added shares of companies listed in the mainland bourses, including Kweichow Moutai Co., Gree Electric Appliances Inc., Huayu Automotive Systems Co. and Daqin Railway Co., the London-based asset manager said.
China’s broadest economic reforms since the 1990s will add less than half a percentage point to annual growth this decade, a survey showed, underscoring the likelihood of a cut in the nation’s expansion target.
Fourteen of 19 economists see policies from a Communist Party summit last month boosting gross domestic product either by a negligible amount or less than 0.5 percent a year compared with their previous outlook, according to the Bloomberg News survey. Ten analysts say China will need at least a small amount of monetary, fiscal and credit stimulus to meet the government’s “bottom line” of 7 percent growth in the next five years.
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