China’s stocks fell for a second day, led by metal and energy companies, after the nation’s biggest copper producer reported slumping profits and commodity prices dropped.
Jiangxi Copper Co. slid for the first time in five days, losing 3.5 percent as UOB-Kay Hian Holdings Ltd. advised selling the shares. PetroChina Co. declined for a second day after senior managers were removed amid a government probe into corruption. China Eastern Airlines Corp. tumbled 5.2 percent after rallying 22 percent in the previous four days. Shanghai International Port (Group) Co. surged 9.9 percent on speculation the start of a free-trade zone will boost earnings.
The Shanghai Composite Index fell 0.2 percent to 2,097.23 at the close. The CSI 300 Index slid 0.4 percent to 2,318.31, with a gauge of material stocks falling the most among industry groups after rising 4.7 percent in the previous three days.
“Commodity stocks saw profit taking today,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages $120 million. “The thematic play on free-trade zones is continuing as there’s little other excitement and catalysts for stocks.”
The Hang Seng China Enterprises Index rose 0.5 percent. The Bloomberg China-US Equity Index added 0.5 percent in New York yesterday. Trading volumes in the Shanghai Composite were 30 percent higher than the 30-day average today, according to data compiled by Bloomberg.
A gauge of material stocks in the CSI 300 declined 1.8 percent, the most among the 10 industry groups, followed by energy. Gold and oil prices dropped after surging yesterday on concern the U.S. may lead a military strike against Syria.
President Barack Obama said in an interview on PBS’s “NewsHour” program that while the U.S. has concluded the Syrian government was responsible for a chemical weapons attack against civilians on Aug. 21, he hasn’t decided on a course of action.
Zijin Mining Group Co., the nation’s biggest gold miner, fell 4 percent to 2.67 yuan, after jumping 10 percent yesterday. Jiangxi Copper, the nation’s biggest producer of the metal, slid 3.5 percent to 17.09 yuan. The company yesterday reported net profit fell 52 percent in the first half. Investors should sell the shares on the worse-than-expected results, Helen Lau, an analyst at UOB-Kay Hian, wrote in a note.
PetroChina, the nation’s biggest oil company, dropped 0.4 percent to 7.92 yuan, extending yesterday’s 0.5 percent decline. Four senior managers include the chairman of unit Kunlun Energy Co. and the general managers of the company’s two biggest oilfields were removed amid the investigation by authorities, according to PetroChina.
China Eastern, the second-biggest domestic carrier, declined 5.2 percent to 2.75 yuan. The recent share rally has been driven by potential policy benefits from the new Shanghai Free-Trade Zone, Barclays Plc said yesterday.
The Shanghai Free-Trade Zone will allow the government to waive laws regarding foreign investment in the zone, paving the way for further liberalization of finance, trade and shipping, Barclays said.
Shanghai Port rose 9.9 percent to 4.11 yuan after jumping by the 10 percent daily limit in each of the last four days.
Brokerages gained as the government pledged to expand the packaging of loans into securities to dissipate financial risks. Haitong Securities Co., the second-largest listed brokerage by market value, climbed 0.9 percent to 11.31 yuan. Sinolink Securities Co. added 1.6 percent to 12.65 yuan.
The expansion is good for brokerages and banks as it pushes forward brokerages’ asset securitization business and trading of credit asset securitization products may extend to stock exchanges from the interbank market, analysts led by Mao Changqing at Citic Securities Co. wrote in a report today.
The Shanghai index is valued at 8.4 times its projected 12-month earnings after falling 7.6 percent this year, compared with the five-year average of 12.7 times, according to data compiled by Bloomberg.
The statistics bureau is scheduled to release results of its official manufacturing index for this month on Sept. 1. The reading is estimated to be 50.6, up from the previous month’s 50.3, according to the median estimate of 29 economists. A preliminary reading by HSBC Holdings Plc and Markit’s Purchasing Managers Index last week was 50.1, resuming expansion from July. The 50 level divides expansion and contraction.