Chinese equities fell the most this month in New York, led by Vipshop Holdings Ltd., after the government signaled it wasn’t planning to ease monetary policy while the Federal Reserve said it may start to pare back stimulus efforts later this year.
The Bloomberg China-US Equity Index of the most-traded Chinese stocks in the U.S. plunged 2.5 percent to 86.26 yesterday, the lowest level since August. Online retailer Vipshop sank 12 percent and Suntech Power Holdings Co. posted its first decline in four days. China Unicom (Hong Kong) Ltd. fell the most this month on slower subscriber growth in May.
China will study measures to support its economic restructuring and maintain a prudent monetary policy while keeping money supply at a “reasonable” level, the cabinet said in a statement yesterday. Fed Chairman Ben S. Bernanke said the central bank may end bond purchases in the middle of 2014 as the Federal Open Market Committee said risks to the outlook for the economy and the labor market have “diminished since the fall” in a statement yesterday.
“Ironically, the signal of a stronger U.S. economy by the Fed is deemed negative for emerging markets,” Eric Brock, who helps oversee $4.2 billion as a portfolio manager at Clough Capital Partners, said by e-mail from Boston. “The sentiment toward Chinese stocks will remain poor, and it’s unlikely the economic data will be positive in the near term. The cash crunch with small banks will damp growth expectations further.”
China’s economic growth slowed to 7.7 percent in the first quarter, from 7.9 percent in the prior period. The seven-day repurchase rate, a gauge of interbank funding availability, surged to the highest level in two years as the central bank refrained from adding funds to ease a cash squeeze.
HSBC Holdings Plc and Markit Economics are due to release a preliminary manufacturing reading today. The index probably fell to 49.1 in June from 49.2 a month earlier, according to the median estimate of 15 analysts in a Bloomberg survey. A reading below 50 indicates contraction.
The iShares FTSE China 25 Index Fund, the largest Chinese exchange-traded fund in the U.S., tumbled 2.7 percent to $33.61 after rising for two days. The Standard & Poor’s 500 Index slid 1.4 percent to 1,628.93, slumping the most this month. Chairman Ben S. Bernanke said the Fed may “moderate” its pace of bond purchases later this year and may end them around mid-2014 in a press conference yesterday in Washington.
“Emerging-market shares will trade down tomorrow, especially if China’s PMI isn’t good,” Michael Wang, an emerging-markets strategist at Amiya Capital LLP in London, said by e-mail yesterday after the Fed’s statement. China is signaling that “the slowdown isn’t worrisome enough for policy makers to take any action at the moment.”
Vipshop’s American depositary receipts plunged to $29 in the biggest one-day slump since May 28.
The Guangzhou, China-based company, which sells fashion goods online at discounts, agreed to invest a total 1.6 billion yuan ($260 million) in building a logistics center in China’s central Hubei province, according to a report yesterday on the technology news site of Tencent Holdings Ltd.
E-Commerce China Dangdang Inc., whose online bookstore is the biggest in the country, also started similar sales of discounted fashion goods last month.
“Intensifying competition with China’s e-commerce companies including Dangdang has forced Vipshop to invest a lot of money to expand the scale of its logistics centers,” Henry Guo, an analyst at ABR Investment Strategy LLC in San Francisco, said by phone. “Otherwise it would be hard for Vipshop to keep up with its fast top-line growth. Dangdang and other big e-commerce companies have already set up their systems.”
Dangdang’s ADRs dropped 6.1 percent to $7.67 in New York, retreating from the highest level in 13 months.
Suntech, the world’s biggest solar-panel maker in 2011, fell 5.7 percent to 99 cents. Sina Corp., owner of China’s biggest Twitter-like service, slid 3.4 percent to $56.89.
Yanzhou Coal Mining Co., China’s fourth-largest coal producer, declined 5.3 percent to $8.02, the lowest price since April 2009. Its ADRs traded 3.4 percent below shares in Hong Kong, the biggest discount in a week. Each ADR represents 10 underlying shares in the Shandong-based company.
China Unicom, the nation’s second-biggest wireless network carrier, lost 3.2 percent to $13.19, the lowest price in two months.
The company added 3.7 million mobile subscribers in May, compared with 3.9 million in April and the smallest increase in three months, data released yesterday showed.
The Hang Seng China Enterprises Index in Hong Kong dropped 1.5 percent to 9,584.54, retreating for a second day this week. The Shanghai Composite Index slumped 0.7 percent to 2,143.45, extending its slump to 6.8 percent this month.