China Stocks Fall From Eight-Week High as Growth Misses Target

Is China's Economy Moving Away From Manufacturing?
  • Chinese GDP grows 6.9% in third quarter vs. 6.8% estimate
  • Technology, telecom companies lead declines in Shanghai

China’s stocks fell, dragging the benchmark index down from an eight-week high, after the release of data showing the weakest quarterly expansion since 2009.

The Shanghai Composite Index slipped 0.1 percent to 3,386.70 at the close, erasing an advance of as much as 1 percent, as five stocks dropped for every three that gained. Technology and telecom companies, the best performers over the past week, led declines. Brokerage shares rose as market turnover jumped to a seven-week high in Shanghai and margin debt increased for a seventh day.

China’s gross domestic product rose 6.9 percent in the three months through September, the National Bureau of Statistics said Monday, beating economists’ estimates for 6.8 percent. Still, that was less than the government’s target of 7 percent for this year. Industrial output in September rose 5.7 percent, trailing estimates.

“The growth number beat the estimate, but it’s still less than the government target,” said Yen Chiu, a Hong Kong-based trader at Shenwan Hongyuan Group Co.

The benchmark measure surged 6.5 percent last week for the steepest weekly gain in four months as traders speculated the government will accelerate reforms of state-owned companies and loosen monetary policy to bolster the economy. The government has cut interest rates five times since November and boosted infrastructure spending in recent months.

Rising Turnover

The Shanghai index’s 16 percent rebound since August continued to lure back investors, with Friday’s turnover jumping to the highest level since Sept. 2 and margin debt capping the longest stretch of gains in two months. Trading volumes in Shanghai were 29 percent above the 30-day average on Monday.

Hong Kong’s Hang Seng China Enterprises Index added 0.2 percent at 3:29 p.m., while the Hang Seng Index lost 0.1 percent. The CSI 300 Index ended little changed.

Gauges of telecom, technology and industrial companies in the CSI 300 slid at least 0.9 percent for the worst performances among 10 industry groups. China United Network Communications Ltd. dropped 2.5 percent, halting a two-day, 7.9 percent gain. Shanghai Wangsu Science & Technology Co. retreated 3.1 percent, paring a rally from the August low to 67 percent.

Key Level

“It may well be profit taking,” said Bernard Aw, a strategist at IG Asia Pte. in Singapore. “In addition, the Shanghai Composite is approaching a key level at 3,500. Investors may not have the conviction to push past this level unless we see a significant impulse such as stronger fiscal or monetary stimulus.”

China’s services sector propped up the economy, suggesting monetary and fiscal stimulus is keeping Premier Li Keqiang’s 2015 expansion target within reach. Retail sales increased 10.9 percent last month, exceeding the 10.8 percent gain forecast. Industrial output missed the estimate of 6 percent growth. Fixed-asset investment climbed 10.3 percent in the first nine months, compared to a median projection of a 10.8 percent increase.

A “sluggish” world economy is weighing on growth, President Xi Jinping said in an interview with Reuters over the weekend. China isn’t immune to the lackluster performance of the global economy, Xi said.

Margin traders increased holdings of shares purchased with borrowed money on Friday, with the outstanding balance of margin debt on the Shanghai Stock Exchange rising 0.3 percent to 602.5 billion yuan ($94.8 billion).

Citic Securities Co., the biggest listed Chinese brokerage, paced gains for financial shares, rising 1.5 percent. Haitong Securities Co. added 1.3 percent.

China National Nuclear Power Co., which has risen threefold since its market debut in June, increased 3.7 percent in Shanghai. The U.K. and China are set to announce a deal that will give the Asian nation a stake in Electricite de France SA’s Hinkley Point project, Britain’s first nuclear plant in three decades. 

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