China Stocks Fall as Bourse on Track for Asia’s Worst Performer

China’s stocks fell, sending the benchmark index towards a third year of losses in four and putting it on track to become Asia’s worst-performing bourse. Financial and commodity companies led declines today.

Bank of China Ltd. and Bank of Communications Co. dropped at least 1.9 percent to lead declines for lenders. Jiangxi Copper Co. slid 0.9 percent to pace losses for metal producers. Poly Real Estate Group Co. slid 1.6 percent, extending this year’s loss to 41 percent. Fiberhome Telecommunication Technologies Co. (600498) jumped 2.1 percent, adding to a 35 percent rally in 2013 as phone stocks rose after the government said investment in the telecom industry is expected to exceed 350 billion yuan ($57.7 billion) in 2014.

The Shanghai Composite Index (SHCOMP) fell 0.2 percent to 2,097.53 at the close. The index has slumped 7.4 percent this year on concern an economic slowdown is curbing profits and higher money-market rates are boosting lending costs for companies.

“We are in a weak market as the government is starting to tackle structural reforms of the economy,” said Zhang Haidong, an analyst at Tebon Securities Co. in Shanghai. “That may take a toll on short-term growth.”

China unveiled the biggest reform package since the 1990s last month, pledging to allow more private investment in state-controlled industries, after earlier promising to give markets a greater role in shaping the economy.

Bank of China fell 1.9 percent to 2.61 yuan today. Bank of Communications, part-owned by HSBC Holdings Plc, sank 2.3 percent to 3.80 yuan.

Developers Slump

Poly Real Estate, the second-biggest developer, slumped 1.6 percent to 8.03 yuan. The Shanghai Composite’s property stock index has lost 13 percent this year, the worst performer among the five industry groups. Measures tracking energy and material companies in the CSI 300 slumped at least 30 percent for the biggest losses among the 10 industry groups.

Jiangxi Copper, China’s biggest producer of the metal, fell 0.9 percent to 14.02 yuan, extending this year’s slump to 41 percent. Yanzhou Coal Mining Co. dropped 0.8 percent to 8.74 yuan and has declined 52 percent this year.

A measure of phone stocks in the CSI 300 gained 0.5 percent, the most among the 10 industry groups. Fiberhome Telecommunication rose 2.1 percent to 15.38 yuan. ZTE Corp. (000063), the second-biggest phone-equipment maker, added 1 percent to 13.23 yuan. The telecom gauge has jumped 20 percent this year.

China plans to invest 100 billion yuan in fourth-generation mobile networks in 2014, the official Xinhua News Agency cited Miao Wei, Minister of Industry and Information Technology, as saying. He also provided China’s telecom investment estimate for next year.

Stocks Outlook

The Shanghai measure will rise 22 percent next year, according to the median forecast of four brokerages that provided targets including Credit Suisse Group AG. The index trades at 8.1 times projected profit for the next 12 months, close to the cheapest level since July 31. Trading volumes in the index were 30 percent below the 30-day average today, according to data compiled by Bloomberg.

China’s benchmark money-market rate fell for a fifth day after the first weekly cash injection by the central bank this month. The seven-day repurchase rate slid 19 basis points, or 0.19 percentage point, to 4.92 percent as of 3:23 p.m. in Shanghai, according to a weighted average compiled by the National Interbank Funding Center.

The rate will probably stay near a record in the coming quarter as policy makers seek to cut overall debt that a state-run researcher estimates has topped $18 trillion. The seven-day repo will average 4.5 percent, according to the median estimate of 11 analysts and traders in a Bloomberg survey. That’s near the unprecedented 4.65 percent in the three months that started Oct. 1, and up from 3.2 percent in the first quarter.

The Hang Seng China Enterprises Index (HSCEI) slid 0.6 percent today. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, added 1.3 percent in New York on Dec. 27.

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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