Most Chinese Stocks Fall as IPO Concerns Overshadow Export Data

Most Chinese stocks fell, led by small-company and technology shares, on concern the possible resumption of initial public offerings will divert funds from existing shares.

Zhejiang Dahua Technology Co., a maker of surveillance cameras, tumbled 7 percent. Great Wall Motor Co. slid to a 17-month low after the automaker reported a month-on-month drop in sales. Industrial & Commercial Bank of China Ltd., the nation’s biggest lender, climbed to a six-month high. Poly Real Estate Group Co. advanced 4.1 percent.

About two stocks declined for every one that gained on the Shanghai Composite Index (SHCOMP), which added less than 0.1 percent to 2,030.50 at the close. The ChiNext index dropped 1.8 percent, paring its gain this year, after the Economic Information Daily reported some companies may receive approval for new share listings as soon as this week.

“Small caps are suffering from IPO sales speculation,” said Wu Kan, a money manager at Shanghai-based Dragon Life Insurance Co., which oversees $3.3 billion. “If the sales pace is too fast, they will have more room to fall. The export data reassured investors that the economy is on a recovery track though the magnitude is weak.”

The CSI 300 Index slipped less than 0.1 percent to 2,134.28. The Hang Seng China Enterprises Index (HSCEI) advanced 0.5 percent. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, added 0.2 percent on June 6.

CSRC Approval

The Shanghai Composite has dropped 3.7 percent this year on concern new share sales may divert funds. Some companies may receive approval for new share listings as soon as this week after passing a review meeting by the securities regulator, the Economic Information Daily reported, citing unidentified people.

The China Securities Regulatory Commission hasn’t approved any new company listings on the Shanghai and Shenzhen exchanges since January.

A sub-index of technology stocks slid 1.7 percent today, the biggest decline among the CSI 300’s industry groups. Zhejiang Dahua tumbled 7 percent while Hangzhou HIK-Vision Digital Technology Co. lost 5.2 percent.

Great Wall Motor slid 5.8 percent, the lowest close since January 2013. The automaker reported a 13 percent drop in sales in May from the previous month.

ICBC rose 1.4 percent. Poly Real Estate climbed 4.1 percent. China Vanke Co., the biggest developer, added 0.6 percent.

Export Outlook

Stronger exports may bolster Chinese leaders’ confidence that a recovery in demand from the U.S. and Europe will support economic growth and reduce the need for stronger stimulus.

“The export figures are positive news for policy makers and we expect continued solid export growth in the coming months amidst gradually improving global demand momentum,” said Louis Kuijs, chief China economist at Royal Bank of Scotland Plc in Hong Kong. “The import data suggest a pretty subdued state of the domestic economy though and the dilemma for the government is how to balance the need to reduce growth in leverage with all the calls for support.”

Imports fell 1.6 percent, a drop that wasn’t forecast by any of the 42 economists in a Bloomberg survey that had a median projection for a 6 percent gain. The trade surplus widened to $35.92 billion.

The statistics bureau is due to release inflation data for May tomorrow. Consumer prices rose 2.4 percent, compared with a 1.8 percent gain in April, according to the median estimate of 45 economists in a Bloomberg survey. Data on industrial production and fixed-asset investment are scheduled for June 13.

U.S. IPOs

Chinese companies making their U.S. stock-market debuts in the past year have rewarded their buyers with the best returns among global peers, fueled by demand for Internet and e-commerce shares from Asia’s biggest economy.

The 10 biggest Chinese companies that completed initial public offerings in the U.S. in the past 12 months have returned an average of 44 percent since their offer dates, compared with 25 percent for all U.S. IPOs of more than $100 million in the same period, according to data compiled by Bloomberg. 58.com Inc., which provides online classifieds, has surged 140 percent since its October IPO and Autohome Inc., a car information website, has gained 110 percent since December.

The Shanghai index is valued at 7.5 times 12-month projected earnings, compared with the five-year average multiple of 11.7, according to data compiled by Bloomberg.

To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

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

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