U.S.-listed Chinese stocks fell the most in two weeks as China Life Insurance Co. dropped on concern industrial output in the world’s second largest economy slowed, and European leaders struggle to resolve the continent’s debt crisis.
The Bloomberg China-US 55 Index of the most-traded Chinese stocks slid 2 percent to 97.97 at the close in New York, the benchmark’s steepest decline since Nov. 23. China Life Insurance Co. fell 5 percent and traded at the biggest discount in two weeks to the Hong Kong stock as competitor New China Life Insurance Co. sold shares near the bottom of a marketed range. E-Commerce China Dangdang Inc. rose 20 percent, the most in half a year, on reports that it will introduce an e-book platform. Spreadtrum Communications Inc. jumped 9.1 percent after saying it may exceed a revenue forecast.
A Chinese government report today may show industrial output increasing at the slowest pace since August 2009, according to economists surveyed by Bloomberg. European regulators said the region’s banks need to raise more capital, while the European Central Bank damped speculation it will increase bond purchases.
“The Chinese are going to get down to a 4 percent growth rate in panic,” David Roche, president of Independent Strategy and a former Morgan Stanley global strategist, said in an interview on Bloomberg Television. Growth will slow as the nation tries to deflate a credit bubble, he said. “Don’t expect it not to be volatile next year. It’s going to be quite tough.”
Decline in Competitiveness
China’s economy will expand 8.5 percent next year even as export growth is pulled down by weak demand and a decline in the nation’s competitiveness, the Organization for Economic Cooperation and Development said in a Nov. 28 report.
The Shanghai Composite Index, which tracks the domestic bourse, dropped 0.1 percent to 2,329.82. The index is little changed since the central bank’s decision Nov. 30 to reduce reserve requirements for the first time since 2008. The Hang Seng China Enterprises Index, which tracks Chinese companies listed in Hong Kong, fell 0.9 percent to 10,395.37.
The Shanghai Composite Index is valued at 11.1 times estimated earnings, while the Bloomberg index of U.S.-listed Chinese companies trades at 12.8 times next year’s earnings.
The Standard & Poor’s 500 index of U.S. stocks dropped 2.1 percent to 1,234.35 as the European Central Bank damped speculation that it would increase debt purchases to fight the region’s crisis.
Beijing-based China Life fell to $39.80 while Hong Kong shares declined 2.3 percent to HK$21.25, or the equivalent of $2.73. One ADR represents 15 ordinary shares. The New York shares trade at an 8 cent discount per Hong Kong share, the biggest such gap in two weeks.
The American depositary receipts of China Mobile Ltd., the world’s largest mobile-phone company by subscribers, fell 1 percent to $47.98, a 12 cent discount to the Hong Kong shares, which fell 0.5 percent to HK$75.55, or the equivalent of $9.72. Each ADR is worth five ordinary shares.
Spreadtrum, a maker of mobile phone chipsets, gained the most in two months after saying it is “on track to meet or exceed” a fourth-quarter revenue forecast of $188 million to $194 million. The shares recovered after dropping 22 percent this week on concern that selling prices and sales of some chips had fallen.
Dangdang, the nation’s largest online book retailer, gained the most in the Bloomberg Chinese stock benchmark, advancing to $5.57 and trimming its decline for the year to 79 percent. The Beijing News reported Dangdang plans to launch an e-book platform this month to provide 50,000 electronic books.
“The digital platform is a positive for the company,” said Andy Yeung, an analyst at Oppenheimer & Co. in New York. “Dangdang is entering a phase that Amazon was in before. When you’re building a platform, it’s not generating profit and the margin is small. The stock may search for direction until people can see the leverage of the business model or a ramp-up in sales.”
LDK Solar Co. gained 7.7 percent to $4.61, extending its rise this month to 30 percent, as a China debt sale makes investors optimistic that the company has enough cash to continue operating. The company sold 500 million yuan ($79 million) of three-year domestic bonds on Dec. 7.
Global investors are souring on Chinese stocks, according to a Bloomberg poll this week. Just 21 percent of global investors called China one of the best places to invest over the next year, compared with 44 percent in a 2009 survey. Most global investors predict the country will face a banking crisis by late 2016, a Bloomberg Global Poll indicated.
A plurality of 46 percent of investors described the Chinese economy as “deteriorating,” compared with 38 percent in a previous poll in September.
China’s industrial output growth probably declined to 12.6 percent last month from 13.2 percent in October, according to the median forecast of 34 economists surveyed by Bloomberg, as the European debt crisis crimps demand in the country’s largest market. Europe accounts for 18 percent of China’s exports. Shipments to the EU declined 18 percent in three months ended in October to $28.7 billion, according to data compiled by the General Administration of Customs.
The country will release industrial production, inflation, and retail sales data today.
Consumer prices probably increased 4.5 percent last month from a year ago, compared with 5.5 percent in October, according to the median estimate of 35 economists surveyed by Bloomberg. Annual inflation reached a three-year high of 6.5 percent in July.
The IShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., fell 3 percent to $35.70.
The Chinese yuan was little changed at 6.3619 per dollar in Shanghai, according to the China Foreign Exchange Trade System. The yuan has advanced 3.8 percent this year, the best performance among Asia’s 10 most-traded currencies excluding the yen.