Chinese stocks posted their steepest weekly loss in a month, as slowing growth in home prices dragged down smaller real-estate companies and China Merchants Property Development Co. (000024) reported a drop in profit.
China Merchants Property fell 1.1 percent to a one-month low. China Fortune Land Development Co. and Jinke Properties Group Co. paced losses for developers after official data showed home prices from the first-tier cities to those less affluent all weakened in March. ZTE Corp. (000063), China’s second-biggest phone-equipment maker, advanced 0.8 percent after first-quarter earnings more than tripled.
“Developers’ earnings will be under great pressure because of rising inventories in some cities,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “Stocks will continue to consolidate around this level.”
The Shanghai Composite Index (SHCOMP) dropped 0.1 percent to 2,097.75 at the close. Trading volumes were 19 percent below the 30-day average today, according to data compiled by Bloomberg. Equity markets including the U.S., Hong Kong and Singapore are closed for a holiday.
The CSI 300 Index slipped less than 0.1 percent to 2,224.48 today, while the Bloomberg China-US 55 Index added 0.7 percent in New York yesterday.
The Shanghai measure slid 1.5 percent this week after official data showed growth in gross domestic product slowed to 7.4 percent in the first quarter from 7.7 percent in the previous period, compared with a 7.5 percent annual target. Industrial production in March and fixed-asset investment for the first three months of the year trailed estimates.
Premier Li Keqiang said China’s first-quarter economic growth is in a reasonable range during a meeting with News Corp. Chief Executive Officer Robert Thomson yesterday in Beijing, China National Radio reported. It is “not easy” for China to keep economic growth of about 7.5 percent, Li said.
The Shanghai index is valued at 7.7 times 12-month projected earnings, compared with the five-year average multiple of 12, according to data compiled by Bloomberg.
China’s new-home price increases eased across the country last month amid tighter credit that prompted developers to give discounts. Prices in Beijing rose 10 percent from a year earlier, the slowest since April last year, while those in Shanghai added 13 percent, the smallest since June, according to data from the National Bureau of Statistics. In smaller cities such as Wenzhou, prices fell 3.9 percent.
China Fortune Land declined 3.5 percent. Jinke Properties retreated 1.3 percent. Merchants Property lost 1.1 percent after net income dropped 6.8 percent in the first quarter.
Developers including Agile Property Holdings Ltd. and Wharf Holdings Ltd. cut home prices in some eastern Chinese cities this year as market sentiment weakened on tight liquidity. China’s broadest measure of new credit fell 19 percent in March from a year earlier and money supply grew at the slowest pace on record, central bank data showed this week.
ZTE added 0.8 percent. First-quarter earnings jumped to 622 million yuan ($100 million), the company said.