China’s benchmark stock index fell for a fourth day as losses for China Petroleum & Chemical Corp. dragged down energy producers, overshadowing a rally for companies linked to potential free-trade zones.
China Petroleum, known as Sinopec, had its biggest two-day loss since June after the government detained seven people for their role in a deadly pipeline explosion. Industrial & Commercial Bank of China Ltd. led declines for lenders. Ningbo Port Co. jumped more than 9 percent for a second day after the Shanghai Securities News said a free-trade zone was approved for the area. Shanghai Jinjiang International Hotels Development Co. surged by the daily limit on optimism the local government will issue a plan to reform the city’s state-owned enterprises.
The Shanghai Composite Index slipped 0.1 percent to 2,183.07 at the close, after changing direction at least eight times. The index has risen 1.9 percent this month as the government announced the largest package of economic reforms since the 1990s after a top-level Communist Party meeting.
“The recent rebound has already reflected good news about reforms from the Party plenum and the market has now come to focus on the fundamentals,” said Zhang Haidong, an analyst at Tebon Securities Co. in Shanghai. “Thematic investments like the free-trade zone concept are popular as the market is range bound.”
The CSI 300 Index declined 0.1 percent to 2,387.42. The Hang Seng China Enterprises Index dropped 0.8 percent. The Bloomberg China-US Equity Index fell 1.4 percent yesterday.
Trading volumes in the Shanghai Composite were 11 percent lower than the 30-day average today, according to data compiled by Bloomberg. The index is down 3.8 percent this year and trades at 8.6 times projected profit for the next 12 months, compared with the seven-year average of 15.3, Bloomberg data showed.
A gauge of energy stocks in the CSI 300 fell 0.8 percent, the most among 10 industry groups. Sinopec, Asia’s biggest oil refiner, lost 2.7 percent to 4.72 yuan after sliding 4 percent yesterday. Two local officials were also detained by police after the Nov. 22 explosion in Qingdao, the city’s Huangdao district government said in a posting on its official microblog yesterday. The explosion at the pipeline operated by Sinopec killed 55 people.
Sinopec won’t see any major negative earnings per-share impact from the incident, Daiwa Securities Group Inc. analysts Adrian Loh and Benjamin Lim wrote in a note dated yesterday. They have a hold rating on the company’s Hong Kong-traded shares. Sinopec plunged 2.6 percent in Hong Kong today. PetroChina Co., the nation’s biggest oil company, fell for a second day in Shanghai, losing 0.8 percent to 7.92 yuan.
ICBC, the nation’s biggest listed lender, slipped 0.5 percent to 3.79 yuan. China Construction Bank Corp., the second largest, fell 0.9 percent to 4.37 yuan. Bank of China Ltd. lost 0.4 percent to 2.80 yuan.
China has drafted rules banning banks from evading lending limits by structuring loans to other financial institutions so that they can be recorded as asset sales, two people with knowledge of the matter said.
The rules drafted by the China Banking Regulatory Commission impose restrictions on lenders’ interbank business by banning borrowers from using resale or repurchase agreements to move assets off their balance sheets, said the people, who asked not to be identified because they aren’t authorized to discuss the rules publicly.
Ningbo Port advanced 9.8 percent to 2.79 yuan, extending yesterday’s 10 percent gain. Ningbo Marine Co. surged 10 percent to 4.13 yuan.
The State Council approved a free-trade zone in the eastern province of Zhejiang, where the city of Ningbo is located, the Shanghai Securities News reported yesterday on its website, citing Zheng Xinli, vice chairman of the China Center for International Economic Exchanges. The council also approved the Dongjiang free-trade zone in Tianjin, it said.
China may include Guangxi autonomous region’s Dongxing city in the free-trade zone trial, the China Securities Journal reported today, without saying where it got the information. Dongxing is the only Chinese city connected by both land and sea with the Asean nations, it said.
Shanghai Jinjiang surged 10 percent to 16.93 yuan. Shanghai Chengtou Holding Co., which is involved in property development, gained 6.3 percent to 9.66 yuan. Shanghai Qiangsheng Holding Co., a taxi operator, climbed 4 percent to 4.43 yuan.
Shanghai may issue a reform plan for state-owned companies in early December, the Shanghai Securities News reported today, citing an unidentified person close to the city branch of the State-owned Assets Supervision and Administration Commission. The Shanghai SASAC will set up a platform for trading of state-owned assets and promote the restructuring of state-owned companies, it said.
Investors shouldn’t worry too much about the impact on stocks of recent rises in yields in China’s long-term government bonds, analysts led by Mao Changqing at Citic Securities Co., wrote in a report today.
Increases in bond yields aren’t totally the result of tighter liquidity and also reflect a stabilizing economy, expectations about inflation, rising risk appetites and changes in banks’ asset allocations, the report said.
The yield of China 10-year government bonds rose to 4.72 percent on Nov. 20, the highest since at least 2007, according to data compiled by Bloomberg.