China Stocks Fall Before GDP Data, Capping Weekly Drop

China’s stocks fell, capping a third week of losses, and a gauge of price swings dropped to a five-year low before gross domestic product data next week.

Gree Electric Appliances Inc. and SAIC Motor Corp., the largest Chinese makers of air-conditioners and autos, led declines for consumer-discretionary companies. Air China Ltd. and Cosco Shipping Co. retreated at least 1 percent. Henan Shuanghui Investment & Development Co., a pork processor, rose 2.8 percent on speculation slumping hog prices will cut costs.

The Shanghai Composite Index dropped 0.6 percent to 2,206.78 at the close, the lowest level since Dec. 27. The measure lost 0.8 percent in the past five days as data on exports and new bank lending boosted concerns about the economy. The CSI 300 Index fell 0.6 percent to 2,462.11. The Hang Seng China Enterprises Index slipped 0.5 percent. The Bloomberg China-US Equity Index slid 1.1 percent yesterday.

Stocks fell “ahead of the GDP data on Monday,” Zhang Haidong, an analyst at Tebon Securities Co., said by telephone from Shanghai. “Recent data show the economy is still weak and investors are still digesting bad news such as property curbs, so we are undergoing a period of correction.”

The Shanghai index has fallen 9.4 percent from a Feb. 6 high amid concern steps to cool property prices will drag on economic growth. The measure changed directions more than a dozen times as 10-day volatility reached 6, the lowest level since the global financial crisis in 2008, according to data compiled by Bloomberg.

“Investors have priced in recent news so there’s nothing to excite the market, so volatility is at a low point,” Zhang said.

Consumer Stocks

Valuations on the gauge dropped to 9.1 times projected 12-month earnings yesterday, near the lowest level since Dec. 13 and less than the seven-year average of 15.8, data compiled by Bloomberg show.

Gree Electric lost 2 percent to 26.20 yuan. The company reported 14 percent growth in first-quarter profit, according to a preliminary earnings statement. Profit growth missed market-consensus expectations of a 20 percent gain, Zhou Haichen, analyst at Shenyin & Wanguo Securities Co., wrote in a report today. SAIC retreated 1.9 percent to 15.29 yuan.

The National Bureau of Statistics will release economic growth data for the first quarter on April 15 along with March figures for industrial production and retail sales and first-quarter fixed-asset investment.

China’s economy probably grew 8 percent in the January-March period from a year earlier, according to the median forecast of 40 economists, down from an 8.2 percent projection in February.

Mixed Data

Industrial production probably rose 10.1 percent from a year earlier, according to the median estimate in a Bloomberg survey. That compares with 9.9 percent in January-February combined, which was the slowest for the period since 2009.

Chinese stocks have had to weather a slew of economic reports this week, including data showing March exports falling more than forecast, inflation easing and producer prices slumping for a 13th month. Data yesterday showed new loans and money supply exceeding analysts’ forecasts, prompting Nomura Holdings Inc. to predict policy tightening ahead.

Data on money supply and total social financing may heighten concerns about gains in asset prices, analysts led by Zhu Jianfang at Citic Securities Co. wrote in a report dated yesterday. An increase in reserve-ratio requirement may also be reasonable option in the case of fund inflows, the report said.

Excess Liquidity

“The market interprets these data as too much liquidity being put into the market, which may be followed by some tightening to prevent real estate prices from going higher,” Elena Ogram, who manages $50 million in emerging-market assets at Bank am Bellevue AG in Zurich, said by e-mail. “On one hand, the economic recovery is subdued and authorities are trying to support it by extra liquidity. On the other, the extra liquidity may push real estate prices higher.”

Air China, the nation’s biggest international carrier, lost 1 percent to 5.12 yuan. Cosco Shipping Co., a unit of the biggest shipper, dropped 1.6 percent to 3.63 yuan.

China’s government bonds are heading for their longest rally in two years on concern the bird influenza outbreak will damp demand for food and services in an economy rebounding from its weakest growth in 13 years.

The nation’s 35 cases of H7N9 flu virus infections and nine deaths are raising the specter of the 2003 global pandemic of severe acute respiratory syndrome that killed 774 people and caused almost $40 billion in economic losses.

Henan Shuanghui advanced 2.8 percent to 78.52 yuan. The pork processer benefits as costs drop amid a slump in hog prices. Pork prices posted a weekly drop of 2.4 percent as of April 9. As Shanghai cracks down on distributors following the discovery of thousands of dead pigs floating in the city’s main waterway, Henan Shuanghui is preparing to spend 5 billion yuan ($805 million) on expansion this year, Zhang Taixi, president of the company, said in an interview on March 15.

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