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Chinese Stock Index Falls for Fourth Day Before Policy Targets

China’s benchmark stock index fell for a fourth day, capping a weekly decline, before the government announces economic growth targets for next year.

China Oilfield Services Ltd. (601088) and ZTE Corp. dropped at least 1 percent, leading energy and phone stocks to the biggest declines among industry groups. Cosco Shipping Co., a unit of the biggest shipping group, advanced 1.3 percent as a benchmark of commodity shipping rates climbed for a 14th day.

The Shanghai Composite Index (SHCOMP) dropped 0.3 percent to 2,196.08 at the close. Some 475 stocks rose and 424 fell. The index slumped 1.8 percent this week amid concern the government will cut its 2014 growth target to 7 percent from 7.5 percent this year at the annual central economic work conference.

“The market is concerned about the uncertainty of the economic meeting and that policy makers are still trying to decide between growth and reform,” said Dai Ming, a money manager at Hengsheng Hongding Asset Management Co. The government vowed on Nov. 15 to allow more private investment in state-controlled industries and loosen its one-child policy in the most sweeping reforms in two decades.

The CSI 300 Index slipped 0.1 percent to 2,406.64, while the Hang Seng China Enterprises Index (HSCEI) rose 0.6 percent.

The Shanghai Composite has fallen 3.2 percent this year on concern slowing economic growth will curb earnings. November data released this week were mixed. Industrial production growth trailed estimates, retail sales accelerated while new loans and aggregate financing exceeded forecasts.

Growth Target

Measures of energy and telecommunication stocks in the CSI 300 slid more than 0.9 percent today. China Oilfield, the drilling unit of the nation’s largest offshore oil producer, slid 3.4 percent to 23 yuan, paring its gain this year to 40 percent. ZTE, China’s second-biggest phone-equipment maker, slid 1 percent to 14.91 yuan.

Guanghui Energy Co. (600256) dropped 2.4 percent to 9.49 yuan. China United Network Communications Ltd., which controls the nation’s second-largest cell phone operator, sank 0.9 percent to 3.33 yuan.

China may keep a proactive fiscal policy and prudent monetary policy next year and rely on fine-tuning, the Economic Information Daily reported today. The government may cut its 2014 growth target to 7 percent from 7.5 percent, the same newspaper said Dec. 4.

Consumer Outlook

Cosco Shipping added 1.3 percent to 3.94 yuan. China Shipping Development Co. (600026), a unit of the second-biggest sea-cargo group, rose 4.5 percent to 5.32 yuan. The Baltic Dry Index climbed 1.7 percent yesterday to its highest level since November 2011.

China’s finance ministry announced a plan to upgrade state-owned enterprises in “key” industries, the Xinhua News Agency reported yesterday, citing people familiar with the ministry. The industries include equipment manufacturing, biomedical, modern agriculture and steel, the report said.

A gauge of consumer-discretionary companies in the CSI 300 rose 0.7 percent, the most among industry groups. Gree Electric jumped 5.2 percent to 34.29 yuan, a record close. Midea Group Co., which makes household appliances, added 1.7 percent to 50.15 yuan.

Sales at larger Chinese retailers hit a monthly record in November, totaling 1 trillion yuan ($165 billion), according to Bloomberg Industries. The November gain bodes well for December sales, which have been more than 15 percent sequentially higher for the last two years, it said.

Stock Options

The Shanghai Composite trades at 8.6 times projected profit for the next 12 months, compared with the seven-year average of 15.2, according to data compiled by Bloomberg. Its 50-day volatility fell to the lowest level since June yesterday, while trading volumes were 22 percent below the 30-day average today.

China has selected Industrial & Commercial Bank of China Ltd., Ping An Insurance (Group) Co., PetroChina Co. and Kweichow Moutai Co. as the first stocks in mock options trading, the Shanghai Securities News reported today.

Investors will also be able to buy and sell options on two exchange-traded funds that track the 50 and 180 biggest yuan-denominated stocks in the Shanghai Stock Exchange, the newspaper reported, citing unidentified brokerages.

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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