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Chinese Stock Index Declines After Industrial Production Slows

China’s benchmark stock index fell after industrial production rose less than estimated last month.

Shipbuilder China CSSC Holdings Ltd. slid 5.3 percent and TBEA Co., a maker of electrical transformers, dropped 2.1 percent. Qingdao Haier Co. paced an advance by appliance makers after Alibaba Group Holding Ltd. agreed to invest HK$2.82 billion ($364 million) in the company’s affiliates. Factory production increased 10 percent from a year earlier last month, an official report showed today, while retail sales growth accelerated to 13.7 percent.

The Shanghai Composite Index slipped less than 0.1 percent to 2,237.49 at the close. Almost the same number of stocks fell as rose. Trading volumes in the measure were 1.6 percent lower than the 30-day average today, according to data compiled by Bloomberg. The ChiNext index tracking smaller companies lost 0.8 percent after two days of gains.

“There are fewer new projects towards the end of year and that contributes to lower industrial production growth,” said Cai Feng, a strategist at Guoyuan Securities Co. in Shanghai. “Sentiment isn’t good as small-caps haven’t stabilized and there are few good plays in the market.”

The CSI 300 Index added 0.1 percent to 2,453.32. The Hang Seng China Enterprises Index declined 0.3 percent.

The Shanghai Composite has risen 4.8 percent since the government vowed on Nov. 15 to allow more private investment in state-controlled industries and loosen its one-child policy in the most sweeping reforms in two decades. The gauge trades at 8.7 times projected profit for the next 12 months, compared with the seven-year average of 15.2, according to data compiled by Bloomberg.

Economic Data

Growth in industrial production and retail sales compared with median estimates of gains of 10.1 percent and 13.2 percent in Bloomberg surveys, respectively.

Fixed-asset investment climbed 19.9 percent from January to November, the National Bureau of Statistics said on its website today. That missed the median estimate of a 20 percent gain in a Bloomberg survey.

The People’s Bank of China will announce November new loans and money supply as early as today.

China started its annual central economic work conference this morning to set economic targets and main tasks for 2014, the official Xinhua News Agency reported today. The growth target will be set at 7 percent or 7.5 percent next year, according to Zhang Zhiwei, chief China economist at Nomura Holdings Inc. in Hong Kong.

Alibaba Investment

China CSSC Holdings, a unit of the nation’s biggest shipbuilder, fell to 20.82 yuan. TBEA slid to 11 yuan. Dongfang Electric Corp., China’s second-biggest maker of power equipment, sank 3 percent to 12.76 yuan.

A measure of health-care stocks in the CSI 300 dropped 1.2 percent, the most among the CSI 300’s 10 industry groups Tasly Pharmaceutical Group Co. fell 2.9 percent to 40.14 yuan.

Qingdao Haier surged 10 percent to 19.91 yuan as the stock resumed trading today after being suspended since Dec. 5.

Alibaba will pay HK$541 million for a 9.9 percent stake in Qingdao Haier Logistics Co. and HK$965 million for about 2 percent of white goods maker Haier Electronics, according to a stock-exchange filing. Alibaba will also subscribe to a HK$1.3 billion bond that can be converted into a 24 percent stake in the logistics unit, Haier Electronics said in its statement.

Shanghai Jiao Yun Co. climbed among companies based in the city on speculation the local government will accelerate reforms of state-owned enterprises. The stock advanced 7.2 percent to 6.41 yuan. Shanghai Highly (Group) Co. increased 10 percent to 7.47 yuan.

U.S. Equities

Local Chinese governments are speeding up the introduction of state-owned company reform plans that give the market a decisive role in resource allocation, the Shanghai Securities News reported today on its front page. Shanghai may release its plan next week, the report said.

Chinese equities slid in New York yesterday as Yanzhou Coal Mining Co. fell to a three-week low on concern China’s increasing air pollution may push the government to curb the use of the fuel.

American depositary receipts of Yanzhou Coal sank 2.7 percent while China Eastern Airlines Corp. declined to a two-week low as Shanghai’s worst smog on record caused flight delays and cancellations.

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