China’s Stocks Benchmark Posts Biggest Quarterly Loss Since June

China’s stocks fell, capping the benchmark index’s biggest quarterly loss since June, as industrial and consumer-discretionary companies slumped before the release of manufacturing data tomorrow.

FAW Car Co. and XJ Electric Co. slid at least 2 percent. China Minsheng Bank Corp. dropped the most in three weeks after earnings trailed analysts’ estimates. BesTV New Media Co., which formed a game console venture with Microsoft Corp. in Shanghai’s free-trade zone, plunged 10 percent as the shares resumed trading following a weeklong halt.

The Shanghai Composite Index (SHCOMP) dropped for a fourth day, losing 0.4 percent to 2,033.31 at the close. The measure fell 1.1 percent this month, extending this quarter’s slump to 3.9 percent, after a private developer collapsed and concern grew the restart of initial public offerings will divert funds.

“It’s a tough market to be in now,” said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu. “Investors are waiting for March data and future policy plans are unclear. They want to know what the government is going to do.”

The CSI 300 Index slipped 0.3 percent to 2,146.31 today, extending this quarter’s loss to 7.9 percent. The Hang Seng China Enterprises Index (HSCEI) advanced 0.7 percent for a 1.9 percent gain this month. The H-shares index trades at 6.8 times estimated earnings, compared with 7.5 for the Shanghai Composite. Trading volumes in the Shanghai index were 20 percent below the 30-day average for this time of day, according to data compiled by Bloomberg.

Economic Data

China’s official manufacturing Purchasing Managers’ Index probably dropped to 50.1 in March from 50.2 in February, an eight-month low, according to the median estimate of 33 economists surveyed by Bloomberg. A number above 50 signals expansion. The National Bureau of Statistics and China Federation of Logistics and Purchasing are scheduled to announce the data at 9 a.m. tomorrow. HSBC Holdings Plc will release its own manufacturing report at 9:45 a.m.

A preliminary reading released by HSBC and Markit Economics on March 24 unexpectedly fell, triggering speculation the government will take further steps to bolster the economy. Barclays Plc said last week the government may announce investment projects and reforms of state-owned companies as the slowdown in manufacturing threatens Premier Li Keqiang’s 7.5 percent economic growth target for this year.

“Investors will be very cautious in trading as they are afraid the data will disappoint,” Zhang Yanbing, an analyst at Zheshang Securities Co., said in Shanghai.

Consumer Discretionary

Gauges of industrial and consumer-discretionary companies in the CSI 300 each fell 0.7 percent, the most among the 10 industry groups. BYD Co., the Chinese automaker partially owned by Warren Buffett’s Berkshire Hathaway Inc., declined 2 percent to 48.11 yuan. FAW Car lost 2.2 percent to 10.10 yuan. Shanghai International Port (Group) Co. slumped 3.9 percent to 4.75 yuan. XJ Electric slid 3 percent to 30.65 yuan.

BesTV New Media slumped by the daily limit to 32.08 yuan, paring gains over the past year to 92 percent.

Minsheng Bank paced declines for lenders, falling 2.4 percent in Shanghai and 2.1 percent in Hong Kong after its full-year net income of 42.3 billion yuan ($6.8 billion) trailed the Bloomberg estimate of 41.9 billion yuan. CIMB Securities HK Ltd. downgraded the shares to reduce. Bank of Communications Co. declined 1.1 percent to 3.78 yuan after it reported a full-year profit of 62.3 billion yuan.

IPO Outlook

New share listings may resume from next month, the China Daily reported last week, citing unidentified people familiar with the matter. The China Securities Regulatory Commission halted new share approvals in January after restarting them following a more than a one-year suspension.

China’s IPOs are vastly outperforming IPOs in the U.S. and Europe so far this year. The 48 companies that completed IPOs in 2014 have surged an average 54 percent to date when adjusted for deal size, compared with a 9 percent gain for 194 first-time sales outside China, according to data compiled by Bloomberg.

That performance owes much to efforts by China’s securities regulator to protect small investors in an initial offering process that had been riddled with fraudulent practices. Facing pressure from the watchdog, most companies that went public this year did so at below-average valuations as they rushed to raise money following a 15-month IPO freeze.

Poly Real Estate Group Co., the second-biggest developer, slid 1.3 percent to 7.61 yuan. China Vanke Co., the largest, retreated 0.4 percent to 8.09 yuan in Shenzhen.

Zhejiang Xingrun Real Estate Co., a private developer which became insolvent this month with 3.5 billion yuan ($563 million) in debt, may portend difficult times ahead for small developers. China has almost 90,000 of them nationwide, National Bureau of Statistics data show. As new-home price growth slows in China and cash-flow conditions tighten, more local builders like Xingrun will face defaults, Fitch Ratings Ltd. Hong Kong-based analyst Andy Chang wrote in a March 19 report.

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.net Allen Wan, Ravil Shirodkar

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