China’s stocks fell for the first time in three days amid concern over the sustainability of the market’s rebound as the government pares support measures.
The Shanghai Composite Index dropped 0.3 percent to 3,635.55 at the close, erasing a gain of as much as 0.6 percent in the last hour of trading. A gauge of technology companies, this year’s best performer, slumped the most among industry groups, while the small-company ChiNext index tumbled 2.2 percent. Jiangxi Copper Co. led a rally for metal producers. Industrial metals surged as the country’s largest copper and nickel suppliers were said to be planning to meet this week to find ways to cope with a supply glut.
The Shanghai Composite has risen 24 percent from its August low. The market rebound has prompted authorities this month to relax some emergency measures imposed during a mid-year rout including resuming initial public offerings and scrapping a rule requiring brokerages to hold net-long positions. The gauge’s 10-day volatility has fallen to an eight-month low, while the number of new investors jumped to a four-month high last week.
“Some small-cap companies are expensive and they need to consolidate at this level to wait for further catalysts,” said Dai Ming, a fund manager at Hengsheng Asset Management Co. in Shanghai. “The market isn’t likely to rally for now.”
The CSI 300 Index retreated 0.6 percent. The Hang Seng China Enterprises Index slipped 0.2 percent, while the Hang Seng Index was little changed. Trading volumes in the Shanghai Composite were 8.9 percent lower than the 30-day average on Thursday.
Chinese stocks in Shanghai and Hong Kong rose earlier in the day amid speculation the government may accelerate reform of state-owned enterprises after PetroChina Co. and Aluminum Corp. of China Ltd. both announced plans to sell stakes in their units. The government last month announced plans to reorganize the telecom industry and promote price reforms in the utilities sector.
The sub-index of technology companies in the CSI 300 slumped 2.5 percent for the biggest loss. East Money Information Co. tumbled 5.4 percent, while Yonyou Network Technology Co. slid 3.8 percent. Even after Thursday’s loss, the gauge is still up 52 percent this year. Technology companies have been rallying because they are positioned to benefit from government efforts to reorient the world’s second-biggest economy toward domestic consumption and away from exports and investment.
Aluminum Corp. of China, known as Chalco, jumped 1.9 percent after it said it plans to sell a stake in a unit in Shanxi province for at least 2.4 billion yuan ($375.6 million). Jiangxi Copper gained 2.6 percent, while Chengdu Huaze Cobalt & Nickel Material Co. jumped by the 10 percent daily limit. Yunnan Tin Co. surged 3.3 percent. Copper and zinc increased more than 2 percent on the LME as of 2:47 p.m. in Shanghai while nickel was up 1.9 percent.
The copper and nickel suppliers plan to meet this week to weigh their response to a price rout, according to people with knowledge of the matter. Regulators are also said to be considering a request from a metal industry group to probe short-selling in domestic contracts.
PetroChina Co., the biggest oil and gas producer, added 0.4 percent in Hong Kong for a sixth day of gains. The company plans to sell its stake in a pipeline company for as much as 15.5 billion yuan. PetroChina and its parent company, China National Petroleum Corp., are seeking to complete asset sales before the end of the year to help meet government-set annual profit goals, people with knowledge of situation said earlier this week.
The Shanghai Stock Exchange celebrates it’s 25th anniversary on Thursday. The bourse’s benchmark index has delivered a 3,548 percent gain since inception, excluding dividends. That compares with 348 percent for the MSCI Emerging Markets Index and 533 percent for the Standard & Poor’s 500 Index.
Margin traders reduced holdings of shares purchased with borrowed money for a third day on Wednesday, with the outstanding balance of margin debt on the Shanghai Stock Exchange falling to 722.9 billion yuan.
— With assistance by Shidong Zhang