Chinese Stocks Decline After Manfacturing Gauges Slow

China’s stocks retreated, led by energy and consumer companies, after gauges of manufacturing in the world’s second-largest economy fell.

Yanzhou Coal Mining Co. and Datong Coal Industry Co. paced declines among energy stocks. Kweichow Moutai Co. (600519) and Wuliangye Yibin Co., the nation’s biggest liquor makers, dropped at least 1.4 percent. Bullion producer Shandong Gold Mining Co. jumped 4.6 percent after scrapping an asset-purchase plan and as gold prices rallied by the most since October.

The Shanghai Composite Index (SHCOMP) dropped 0.3 percent to 2,109.39 at the close. The gauge slid 6.8 percent last year, making it the worst-performing benchmark equity index in Asia. Data yesterday showed the official Purchasing Managers’ Index slipped to a four-month low in December, while a private report today also signaled manufacturing grew at a slower pace.

“The weaker PMI probably heralds a weak start of economic growth this year as China is still finding a new growth model,” said Wang Zheng, the Shanghai-based chief investment officer at Jingxi Investment Management Co. “The weaker economy will hold back stocks.”

China’s equities fell last year amid concern slowing economic growth will curb profits. Property and energy companies were the worst performers among industry groups, while technology and drug stocks posted the biggest gains.

The CSI 300 Index lost 0.4 percent to 2,321.98. The Hang Seng China Enterprises Index (HSCEI) of mainland companies in Hong Kong slid 1.5 percent. Trading volumes in the Shanghai Composite were 32 percent below the 30-day average today.

PMI Indexes

The official PMI was at 51, the National Bureau of Statistics and China’s logistics federation said yesterday in Beijing. That was less than the median 51.2 estimate in a Bloomberg News survey of 29 economists and November’s reading of 51.4.

A manufacturing index compiled by HSBC Holdings Plc and Markit Economics Ltd. fell to 50.5 in December, compared with 50.8 the previous month and the 50.5 estimate in a Bloomberg survey of 17 economists. A figure above 50 indicates expansion.

Sub-indexes of energy, consumer-staples and financial companies sank at least 0.8 percent today, the biggest decliners among 10 industry groups.

Yanzhou Coal lost 2.6 percent to 8.65 yuan. Datong Coal fell 3.5 percent. Kweichow Moutai, China’s biggest liquor maker by market value, declined 1.9 percent. Wuliangye, the second-largest, dropped 1.4 percent.

Ping An Insurance Group Co. declined 1 percent, while Industrial Bank Co. lost 1.6 percent.

Xi Speech

Xi Jinping, delivering his first New Year’s address as China’s president, said the country must press ahead with reforms in 2014 to improve livelihoods and make the country “rich and strong.”

A key task will be overseeing the broadest economic reforms since the 1990s, which were spelled out at the Communist Party Central Committee’s Third Plenum in November, Xi said on Dec. 31. Shifts include loosening the one-child policy, increasing property rights for farmers and encouraging private investment in more industries.

The central bank will continue a prudent monetary policy and keep policies stable and continuous this year, People’s Bank of China Governor Zhou Xiaochuan wrote in a New Year address posted on the website.

The China Securities Regulatory Commission approved initial public offering applications of six more companies, the China Business News reported on its website yesterday. The six firms including Shaanxi Coal Industry Co. may raise a combined 19.3 billion yuan ($3.2 billion), it said.

Stock Valuations

Shandong Gold jumped 4.6 percent to 18.05 yuan, capping the biggest gain since Aug. 28. The stock resumed trading today after being suspended since Dec. 25. The gold producer abandoned a plan to buy about 13 billion yuan of assets from its parent and other parties because of a price drop, the company said in a Dec. 27 statement.

Spot gold traded at $1,222.08 an ounce as of 3:36 p.m. Hong Kong time, from $1,205.65 on Dec. 31, when prices sank to $1,182.27, the lowest level since June 28. The precious metal dropped 28 percent last year, the biggest annual loss since 1981.

The Shanghai Composite trades at 8 times projected profit for the next 12 months, the lowest level since July 31, according to data compiled by Bloomberg.

Chinese stocks traded in New York posted a second annual gain as NQ Mobile Inc. (NQ) surged to the highest since October and Noah Holdings Ltd. jumped.

The Bloomberg China-US Index, a measure of the most-traded U.S.-listed Chinese companies, rose 0.9 percent on Dec. 31. NQ Mobile, the mobile service provider accused by short seller Muddy Waters LLC of overstating revenue, rose 5.8 percent, jumping for a second day after Morgan Stanley said it bought a stake in the company. Noah, a wealth management company, climbed the most in seven weeks.

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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