China’s Stock-Index Futures Retreat, Free-Trade Stocks May Move
China’s stock-index futures fell after the benchmark index dropped for the first time in three days yesterday.
Shanghai International Port Group Co. (600018) and Shanghai Waigaoqiao Free Trade Zone Development Co. may move after the Xinhua News Agency said the city’s free-trade zone will open this week-end. ZTE Corp. may be active among telecommunication companies after the Shanghai Securities News said the government will issue a fourth-generation license for mobile-phone operators this year.
Futures on the CSI 300 Index expiring in October declined less than 0.1 percent to 2,445 as of 9:22 a.m. local time.
The Shanghai Composite Index (SHCOMP) dropped 0.6 percent to 2,207.53 yesterday. It has advanced 12 percent since June, heading for the biggest quarterly gain since the final three months of 2009, as economic data signaled growth is accelerating and shares linked to Shanghai’s free-trade zone surged on speculation the area will serve as a testing-ground for reduced government regulation and freer yuan trading.
The CSI 300 Index (SHSZ300) declined 1.2 percent to 2,443.89. The Hang Seng China Enterprises Index (HSCEI) retreated 1.1 percent. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, fell 1 percent in New York.
Trading volumes in the Shanghai Composite were 13 percent higher than the 30-day average yesterday, according to data compiled by Bloomberg. The index is valued at 8.8 times projected earnings for the next 12 months, compared with the five-year average of 12.6 times.
Shanghai’s free-trade zone will open on Sept. 29, the Xinhua News Agency reported on its microblog yesterday, citing local government.
China’s economy slowed this quarter as growth in manufacturing and transportation weakened in contrast with official signs of an expansion pickup, a private survey showed.
Increases in business-investment and real estate revenue also slowed, while service industries picked up and employees became tougher to find, the survey from New York-based China Beige Book International said yesterday. The report is based on responses from 2,000 people from Aug. 12 to Sept. 4 as well as 32 in-depth interviews conducted later in September.
China’s improving official economic data are unconvincing to Jim Chanos, the founder of Kynikos Associates Ltd., who is maintaining bearish bets on the nation’s banks.
“My caution is related to the credit-driven model,” Chanos, who correctly wagered in 2001 on the collapse of Enron Corp., said on a panel moderated by Tom Keene at the Bloomberg Markets 50 Summit in New York. “If you grow new credit by 30 percent to 40 percent” of gross domestic product a year, it’s not difficult to reach the government’s growth target, he said.
While Chanos said China will have a “credit event” in five years as the country fails to keep the same pace of loan growth, Jim O’Neill, the former chief economist at Goldman Sachs Group Inc., said the economy will double in five years to $16 trillion, about the same size of the U.S. economy currently.
ZTE, China’s second-biggest phone-equipment maker, may be active. China will issue the 4G license before the end of this year, the Shanghai Securities News reported, citing Miao Wei, minister of the Ministry of Industry and Information Technology.
China Unicom (CHU) (Hong Kong) Ltd. and China Telecom Corp. led declines in U.S.-traded Chinese equities yesterday after monthly data showed the wireless carriers lost market share in third-generation services.
China Unicom, the nation’s second-largest mobile carrier, slid the most in three months. Yanzhou Coal Mining Co. traded below its Hong Kong shares for a fourth day, while Baidu Inc. (BIDU) climbed to the highest level in 17 months.
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at email@example.com