China’s Stocks Fall to Five-Month Low as Great Wall Motor SlumpsWeiyi Lim
China’s stocks fell, sending the benchmark index to a five-month low, as Great Wall Motor Co. led a tumble in automakers and traders speculated the resumption of new share sales will divert funds from existing equities.
Great Wall Motor, the biggest Chinese maker of sport-utility vehicles, lost more than 3 percent in Hong Kong and Shanghai after forecasting slowing 2014 sales growth. Yunnan Copper Industry Co. slid to the lowest level in five years and Jiangxi Copper Co. dropped 2.5 percent as a gauge of material producers posted the biggest loss among industry groups.
The Shanghai Composite Index fell 0.8 percent to 2,027.62 at the close. The Hang Seng China Enterprises Index slid 1.8 percent. The China Securities Regulatory Commission approved 12 IPOs yesterday, renewing concern that a surge in new supply will weigh on share prices, according to Zhang Haidong, an analyst at Tebon Securities Co. in Shanghai. Speculation that trade figures due tomorrow will trail estimates also spurred declines in the afternoon session, said Shenyin & Wanguo Securities Co.
“There are many new stocks that will be released so there are liquidity concerns,” said Zhang. “There may be 50 new IPOs in January -- this is going to add pressure and weigh on the market.”
China, the world’s largest IPO market in 2010, with a record $71 billion raised, hasn’t had an IPO since October 2012 as the securities regulator cracked down on fraud and misconduct among advisers and companies.
The CSI 300 Index retreated 0.9 percent to 2,222.22. The Shanghai index has dropped 4.2 percent this year, extending 2013’s 6.75 percent decline, amid concern slowing economic growth wil hurt profits. A report today showed producer prices extended the longest slide since the 1990s in December.
Export growth probably slowed to 5 percent last month from 12.7 percent a month earlier, according to the median estimate of 39 economists surveyed by Bloomberg. A report today showed producer prices extended the longest slide since the 1990s in December.
“Some investors might be anticipating relatively soft export and import figures but in our view the figures will come basically around market forecast expectation,” said Gerry Alfonso, a trader at Shenyin & Wanguo.“The macro figures released in the early morning were uneventful. The rebound in the first half of the morning session was slightly overdone and the market seems to be compensating for it.”
China’s consumer-price index rose 2.5 percent last month, a government report today showed, compared with a 2.7 percent median estimate of 41 analysts surveyed by Bloomberg News. The producer-price index fell 1.4 percent, the 22nd straight drop.
Premier Li Keqiang is trying to keep consumer-price gains within targets as the government starts implementing the broadest economic-policy reforms since the 1990s, unveiled after a Communist Party summit last month. The government’s inflation target was 3.5 percent last year. China may set a 2014 target of 4 percent, the China Securities Journal said Dec. 31.
Great Wall Motor slid 8.5 percent in Hong Kong after the company said it aims to sell 880,000 units in 2014, which implies 17 percent growth compared with 21 percent last year. The stock dropped 3.2 percent to 39.50 yuan in Shanghai.
“It looks like the company has already touched the ceiling for growth after years of fast expansion,” said Wei Wei, an analyst at West China Securities Co. in Shanghai.
SAIC Motor Corp., the biggest automaker, slumped 2.5 percent to 13.06 yuan.
A gauge of material companies in the CSI 300 fell 2.3 percent, the most among 10 industry groups. Yunnan Copper dropped 4.2 percent to 7.53 yuan. Jiangxi Copper, the biggest producer of the metal, slid 2.5 percent to 13.56 yuan.
The Bloomberg China-US Equity Index rose 0.8 percent yesterday as Qihoo 360 Technology Co. jumped to a two-month high amid speculation Alibaba Group Holding Ltd. may invest in the Internet company.