- Weekend data showed industrial output trailed estimates
- Gauges of technology, commodity-related shares lead retreat
China’s stocks slumped the most in three weeks as data over the weekend added to concern the economic slowdown is deepening and traders gauged the level of state support for equities.
The Shanghai Composite Index slid 2.7 percent to 3,114.80 at the close, paring earlier declines of 4.7 percent. About 12 stocks fell for each that rose on the gauge, led by technology and consumer companies. The Hang Seng China Enterprises Index added 0.1 percent in Hong Kong.
Industrial output missed economists’ forecasts, while investment in the first eight months increased at the slowest pace since 2000. The Shanghai Composite has tumbled 40 percent from its June high to erase almost $5 trillion in value on mainland bourses as leveraged investors fled amid concerns valuations weren’t justified given dimming growth outlook. China’s government spent 1.5 trillion yuan ($246 billion) trying to shore up its stock market since the rout began three months ago through August, according to Goldman Sachs Group Inc.
"Investors continue to be nervous and are trying to avoid being caught in another correction," said Gerry Alfonso, a sales trader at Shenwan Hongyuan Group Co. in Shanghai. Government funds appear to be "staying out" of equities to try to discourage investors from relying on interventions, he said.
Industrial output rose 6.1 percent in August from a year earlier, missing the 6.5 percent estimate. Fixed asset investment excluding rural households climbed 10.9 percent in the first eight months versus the 11.2 percent median projection of economists surveyed by Bloomberg. Five interest-rate cuts since November and plans to boost government spending have yet to revive an economy mired in a property slump, overcapacity and factory deflation.
The government also announced details about plans to make state-owned enterprises more efficient. China will seek to channel more private investment into its state firms, seeking to overhaul the companies that dominate the $10 trillion economy. The plan aims to reform “zombie enterprises,” while encouraging a “blending” between state and private capital, government agencies overseeing the plan said in statements Monday.
The Hang Seng Index rose 0.3 percent. The CSI 300 Index dropped 2 percent. Investors pulled a net $1.7 billion from equities on mainland and Hong Kong bourses during the week to Sept. 9, a ninth straight week of outflows, according to China International Capital Corp.
“The economic reports don’t look good so investors prefer to be on the sidelines,” said Wu Kan, a Shanghai-based fund manager at JK Life Insurance Co. “The SOE reform rules were widely expected by the market and aren’t very detailed, therefore the reaction is limited. The market could fall to a lower level.”
A measure tracking technology stocks on the CSI 300 slumped 8.7 percent for the biggest decline among industry groups. Hundsun Technologies Inc. and Leshi Internet Information & Technology Corp. both tumbled by the 10 percent daily limit.
Yunnan Copper Co. and Hebei Iron & Steel Co. lost 10 percent. A gauge of material producers slumped 4.1 percent to its lowest level since Aug. 26.
Haitong Securities Co. sank 3.8 percent in Hong Kong as brokerages declined. Haitong and three other securities firms were were fined 178.5 million yuan ($28 million) by the securities regulator for failing to adequately check clients’ identities, CSRC spokesman Deng Ge said at a briefing in Beijing on Friday.
Margin traders reduced holdings of shares purchased with borrowed money on Friday, with the outstanding balance of margin debt on the Shanghai Stock Exchange falling by 0.2 percent to 618.9 billion yuan.
A gauge of 100-day volatility in Shanghai climbed to its highest level since 1997 last month, while turnover sank to a six-month low last week.
— With assistance by Shidong Zhang