China’s stocks fell for a second day, led by consumer-discretionary companies, amid concerns a property slowdown will hurt economic growth and new share sales will divert funds.
Qingdao Haier Co., China’s biggest refrigerator maker, and Great Wall Motor Co., the largest maker of sport utility vehicles, declined at least 1.7 percent. Anhui Conch Cement Co., the biggest producer of the building material, slid to the lowest level since March. Four companies including Guangdong Ellington Electronics Technology Co. plan to sell shares today. Tasly Pharmaceutical Group Co. rose to the highest level in two months after the company announced a private share placement.
The Shanghai Composite Index (SHCOMP) fell 0.5 percent to 2,055.52 at the close. China’s property market remains the biggest risk to the economy in the near term after housing data today showed prices sliding in May for the first time in two years, JPMorgan Chase & Co. said.
“The property market is an integral component of the economy and investors expect the government to introduce gradual stimulus measures or may even start to ease curbs in the property sector to ensure the economic growth target is met,” said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu. “There’s a short-term impact from the new share sales because investors are diverting funds from the market to subscribe to them.”
The CSI 300 Index retreated 0.4 percent to 2,160.24. The Hang Seng China Enterprises Index (HSCEI) slipped 0.1 percent at 3:10 p.m. local time. The Bloomberg China-US Equity Index added 0.5 percent yesterday.
The Shanghai gauge has dropped 2.9 percent this year and trades at 7.6 times 12-month projected earnings, compared with the three-year average of 9, according to data compiled by Bloomberg. Trading volumes were 14.8 percent higher than the 30-day average.
China’s national housing prices declined 0.2 percent on average in May, the first month-on-month decline since June 2012, JPMorgan wrote in a report today after the release of National Bureau of Statistics data. Compared with the previous month, new home prices dropped in 35 cities, were unchanged in 20 cities and increased in 15 cities, it said. In Shanghai, prices decreased 0.3 percent from April, the first decline in two years, while they fell 0.2 percent in Shenzhen.
“Overall, housing market activity seems to bottom out from the sharp decline in the first quarter, but the activity remains weak and the market still faces large pressure for adjustment,” wrote Haibin Zhu, China economist at JPMorgan.
Qingdao Haier dropped 1.7 percent to the lowest level in two weeks, while Great Wall Motor led declines for automakers with a 1.8 percent loss. Anhui Conch paced losses for material companies with a 1.3 percent retreat. A measure of property shares in the Shanghai index retreated 0.2 percent as Shanghai Waigaoqiao Free Trade Zone Development Co. slid 2.7 percent.
China’s property industry extended its slump last month as sales and construction dropped and investment growth slowed, threatening to drag on a recovery in the economy. Home sales in the January-to-May period fell 9.2 percent from a year earlier by area, after an 8.6 percent decline in the first four months, NBS data showed June 13. New property construction dropped 18.6 percent this year through May and residential housing starts fell 21.6 percent by area.
Shanghai Beite Technology Co. set its initial public offering price at 7.01 yuan, while Guangdong Ellington priced its IPO at 15.31 yuan, according to statements to the bourse. Shanghai Lianming Machinery Co. and Wuxi Xuelang Environmental Technology Co. are also marketing their shares to investors.
China plans to have about 100 IPOs from June through the end of this year, China Securities Regulatory Commission Chairman Xiao Gang said in a statement on May 19. The share sales will be spread over time to ensure there are a similar number each month, according to the statement.
The new share sales ‘will introduce volatility in the market,’’ Gerry Alfonso, a trader at Shenyin & Wanguo Securities Co., said by e-mail from Shanghai today.
Tasly Pharmaceutical jumped 3.5 percent after the company announced plans to raise up to 2.5 billion yuan ($401 million) in a private share placement.
To contact the reporter on this story: Weiyi Lim in Singapore at firstname.lastname@example.org