China’s Stocks Drop After Non-Manufacturing Data as Citic Slides

China’s stocks fell, with the benchmark index capping a weekly loss, after a report showed non-manufacturing declined in December and on concern investors are withdrawing money before new share sales.

Citic Securities Co. and China Life Insurance Co. led financial companies to the biggest decline among 10 industry groups. SAIC Motor Corp. slid 2.9 percent and flat-panel television maker Hisense Electric Co. dropped 3.4 percent as consumer-discretionary companies fell. Inner Mongolia Baotou Steel Rare-Earth Hi-Tech Co. climbed the most in five weeks on speculation the government will consolidate the industry.

The Shanghai Composite Index sank 1.2 percent to 2,083.14 at the close, posting a 0.9 percent drop this week. The non-manufacturing Purchasing Managers’ Index fell to a four-month low, data showed today, after two measures of December factory output in the world’s second-largest economy declined. Five companies were approved to sell initial public offering shares, according to exchange statements, bringing the total to 16 already endorsed for this year.

“Economic activities in China usually taper off in winter,” said Dai Ming, a money manager at Hengsheng Hongding Asset Management Co. “There’s no excitement in the macro-economy and in this case it’s difficult for the stock market to have a good performance. The fast pace of IPO sales is drying up liquidity as investors sell existing shares in preparation for new share subscriptions.”

PMI Index

The CSI 300 Index declined 1.3 percent to 2,290.78. The Hang Seng China Enterprises Index retreated 2.7 percent. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, fell 1.4 percent in New York yesterday. Trading volumes in the Shanghai Composite were 15 percent lower than the 30-day average today, data compiled by Bloomberg show.

The benchmark index fell 6.8 percent last year amid concern slowing economic growth will curb profits, and is valued at 7.9 times projected 12-month earnings, the lowest level since June, according to data compiled by Bloomberg.

China’s non-manufacturing gauge fell to 54.6 in December from 56 in November, the Beijing-based National Bureau of Statistics and China Federation of Logistics & Purchasing said today. A reading of more than 50 indicates expansion.

Guangzhou Tinci Materials Technology Co. and four other companies said they will trade shares on the mainland’s two bourses, according to exchange statements. Four will be listed in Shenzhen and one in Shanghai.

IPO Approvals

The China Securities Regulatory Commission has approved IPOs for 16 companies since ending a yearlong halt on new share sales last month. About 50 companies are expected to complete the IPO approval preparations and list or be ready to do so by the end of January, the CSRC said.

Gauges of financial and consumer-discretionary stocks dropped at least 1.6 percent, the most among the 10 sub-indexes of the CSI 300.

Citic Securities, China’s biggest listed brokerage, fell 2.9 percent to 12.23 yuan. China Life, the nation’s biggest insurer, lost 2.6 percent. SAIC, China’s largest carmaker, slumped to 13.45 yuan. Hisense Electric, the country’s biggest manufacturer of flat-panel televisions, retreated to 10.97 yuan.

Baotou Rare-Earth rose 3 percent, the steepest increase since Nov. 28. The State Council approved a plan to set up “large” rare-earth groups that will get government policy support, the Economic Information Daily reported, citing an unidentified person.

Rare Earth

Other rare-earth makers also rose. China Minmetals Rare Earth Co. gained 3.2 percent. Rising Nonferrous Metals Share Co. added 1.5 percent.

Chinese stocks listed in New York fell the most in two weeks yesterday, led by commodity producers, as declines in manufacturing indexes spurred concern the nation’s growth is slowing.

Yanzhou Coal Mining Co., China’s fourth-largest coal producer, tumbled 9 percent, while China Petroleum and Chemical Corp. slid to a two-month low. Yingli Green Energy Holding Co. surged 24 percent after announcing a joint venture with a state-owned company.

— With assistance by Shidong Zhang

Before it's here, it's on the Bloomberg Terminal.