China’s stocks fell, dragging down the benchmark index to the lowest in two weeks, on concern the nation’s economic slowdown is curbing demand for products from copper to household appliances.
Citic Securities Co. and Haitong Securities Co., the nation’s biggest-listed brokerages, dropped after Capital Week magazine reported there are discussions to reduce stock commissions by 20 percent. Jiangxi Copper Co. and Aluminum Corp. of China Ltd. led losses for metal stocks after the world’s biggest iron-ore producer said China’s “golden years” are gone as economic growth decelerates. Suning Appliance Co., China’s biggest electronics retailer, rebounded 10 percent after its second-biggest shareholder said it will buy shares.
“There’s no stimulus from the government recently and without strong policies, the economy will have a hard time rebounding on its own,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “The market weakness will persist.”
The Shanghai Composite Index slid 1.1 percent to 2,118.95 at the close, the lowest level since Aug. 2. The CSI 300 Index fell 1.1 percent to 2,331.61. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong declined 1.5 percent. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, added 0.6 percent in New York yesterday.
The Shanghai Composite has tumbled 14 percent from this year’s high on March 2 amid concern the economic slowdown is deepening. The index is valued at 9.5 times estimated profit, compared with the 17.4 average since Bloomberg began compiling the data in 2006.
Citic Securities declined 1 percent to 10.70 yuan and Haitong Securities retreated 2.1 percent to 8.62 yuan. China Merchants Securities Co. lost 1.7 percent to 9.91 yuan.
The China Securities Regulatory Commission, fund managers and brokerages are discussing plans to cut commissions by 20 percent, Capital Week reported yesterday, citing an unidentified person at Fullgoal Fund Management Co. Commissions may be reduced to 0.064 percent from 0.08 percent, according to the report.
While overseas firms were granted $6.9 billion of quotas to purchase mainland securities since December, more than in any full year since the government program began, the number of Chinese stock accounts containing funds dropped by 788,000 to 56.3 million in the year to Aug. 3, the most for a 12-month period. A record 110 million are empty or frozen, according to regulatory data compiled by Bloomberg.
Vale’s China Outlook
Jiangxi Copper, the nation’s biggest copper producer, fell 1.9 percent to 21.33 yuan. Chalco, the listed unit of nation’s biggest maker of Aluminum, slid 1.6 percent to 6.04 yuan. Baoshan Iron & Steel Co., the listed unit of China’s second-biggest steelmaker, lost 1 percent to 4.14 yuan.
“We are not going to see the spectacular growth rates of 10, 12 percent per year,” Roberto Castello Branco, Vale SA’s director of investor relations, said at the Bloomberg Brazil Economic Summit in Rio today. “The golden years are gone.”
Vale, which shipped about 44 percent of its iron ore and pellets to Chinese steelmakers in the second quarter, expects the country to start to recover by the end of the year, said Branco. Vale sees some “early signals” of recovery, which are still “very weak,” he said.
Suning rebounded by the daily maximum 10 percent to 6.47 yuan. The company said its second biggest shareholder will increase its stake by as much as 1 billion yuan within three months. The stock plunged as much as 5.3 percent earlier after the company said it would cut prices.
Suning, Gome Electrical Appliances Holding Ltd., China’s second-largest electronics retailer, and 360buy.com announced campaigns to lower prices yesterday, according to the official microblogs of Gome’s online store, Suning.com’s Executive Vice President Li Bin and 360buy.com Chairman Liu Qiangdong. Gome declined 6.9 percent to HK$0.67.
Chinese government data showed last week that July exports grew 1 percent after climbing 11.3 percent in June. Industrial production and new bank loans also rose less-than-estimated.
The government’s slower-than-forecast cuts in banks’ reserve requirements show authorities are reluctant to shake their concern inflation will quicken, three months after Premier Wen Jiabao shifted priorities to boosting growth.
“The central bank is still concerned about a rebound in inflation, and it is reluctant to loosen too much on the liquidity side,” said Xu Gao, an economist with Everbright Securities Co. in Beijing.
China has left the reserve ratio for the biggest banks at 20 percent since mid-May while lowering interest rates in June and July, bucking forecasts from HSBC Holdings Plc and Societe Generale SA that the government would build on three ratio reductions since Nov. 30.
International money managers are lining up to buy stocks in mainland China at a record pace, even as a third year of equity losses spurs local investors to empty trading accounts like never before.
“Buying A-shares now is a good opportunity as valuations in the Chinese market have dipped so much,” said Mark Mobius, the executive chairman of Templeton Emerging Markets Group.
China International Marine Containers (Group) Co.’s B shares jumped 3.3 percent to HK$9.67 after announcing plans to move trading to Hong Kong. The world’s biggest container maker intends to list on the Hong Kong Stock Exchange by converting 1.43 billion B shares to H shares, it said in a statement.
“There’s never been a case of B shares being converted to H shares, so this is innovative,” Xu Minle, a Shanghai-based analyst at Bank of China Ltd., said by telephone. “B shares are lightly traded and less active compared with H shares, so this is good for their name recognition globally.”
Thirty-day volatility in the Shanghai index was at 14.3 today, compared with this year’s average of 17.5. About 5.3 billion shares changed hands in the gauge today, 34 percent lower than the daily average this year.