Most Chinese stocks rose as gains for consumer-staples producers and trainmakers overshadowed losses for property developers.
Liquor maker Kweichow Moutai Co. surged to the highest level in six months. Trainmaker CSR Corp. jumped 4.7 percent after the shares were upgraded to buy at Citigroup Inc. China Vanke Co. and Poly Real Estate Group Co., the nation’s biggest developers, slumped at least 1 percent after official data showed the number of cities that reported housing-price gains fell last month. Zhejiang Xingrun Real Estate Co., a private developer, collapsed with 3.5 billion yuan ($566.6 million) in debt, government officials familiar with the matter said.
The Shanghai Composite Index rose 0.1 percent to 2,025.20 at the close, with five stocks advancing for every four that fell. The collapse of Zhejiang Xingrun stoked concern defaults are starting to mount as the economy slows and the government reins in lending.
“Investors are cautious of property stocks as corporate bond risks are pretty high,” said Zeng Xianzhao, an analyst at Everbright Securities Co. “They are selectively choosing stocks before more policy measures are rolled out.”
The CSI 300 Index retreated 0.2 percent, while the Hang Seng China Enterprises Index (HSCEI) lost 0.1 percent. The Bloomberg China-US Equity Index advanced 0.8 percent yesterday.
A measure of consumer-staples companies in the CSI 300 jumped 0.9 percent, the second-biggest gain among 10 industry groups. Kweichow Moutai, the biggest maker of baijiu, rose 2.9 percent to 171.32 yuan. Group unit Guizhou Xijiu aims to list in Hong Kong by the end of this year, the Shanghai Securities News reported, citing a conference held in Guiyang yesterday. Kweichow Moutai Group targets sales of 100 billion yuan in 2017, the report said.
Wuliangye Yibin Co., the second-biggest maker of baijiu, climbed 1.5 percent to 18.03 yuan.
CSR gained 4.7 percent to 4.42 yuan. The company’s 12.8 billion yuan order from Transnet Freight of South Africa, among 20.8 billion yuan worth of contracts recently announced, is the single largest order that Chinese train makers have ever received, Citigroup analysts led by Paul Gong wrote in a report.
China CNR Corp. advanced 0.9 percent to 4.30 yuan.
The Shanghai measure has fallen this year after economic data from manufacturing to exports signaled a slowdown and concern grew there will be more bond defaults after a solar company failed to make debt interest payments. The index trades at 7.7 times projected 12-month earnings, compared with a multiple of 10 for the MSCI Emerging Markets Index.
A measure of real-estate companies in the Shanghai index slid 0.9 percent, the most among five industry groups. Poly Real Estate dropped 2.8 percent to 6.88 yuan. China Vanke fell 2.1 percent to 7.60 yuan in Shenzhen trading.
Zhejiang Xingrun Real Estate doesn’t have enough cash to repay creditors that include more than 15 banks, with China Construction Bank Corp. (939) holding more than 1 billion yuan of its debt, according to the officials, who asked not to be named because they weren’t authorized to discuss the matter. The company’s majority shareholder and his son, its legal representative, have been detained and face charges of illegal fundraising, the officials said.
The collapse comes less than two weeks after Shanghai Chaori Solar Energy Science & Technology Co. became the first company to default on its onshore corporate bonds. Calls to the chairman’s office and financial department at Zhejiang Xingrun weren’t answered yesterday.
Growth in new-home prices in Beijing and Shenzhen each rose 0.2 percent in February from a month earlier, the National Bureau of Statistics said. That was the slowest pace since October 2012. They added 0.4 percent in Shanghai, the smallest increase since November 2012, and gained 0.5 percent in Guangzhou. Prices climbed in 57 of the 70 cities tracked by the government. That compares with 62 in January.
To contact the reporter on this story: Weiyi Lim in Singapore at firstname.lastname@example.org