China’s Stocks Fall on Economic Concerns as Citic Bank PlungesBloomberg News
China’s stocks fell, capping a weekly decline for the benchmark index, as losses for China Citic Bank Corp. dragged down financial companies and coal producers slumped on concern a slowing economy will curb demand.
Citic Bank, which announced plans to offer virtual credit cards with Tencent Holdings Ltd., plunged more than 6 percent before being suspended in Hong Kong and Shanghai as a person with knowledge of the matter said the central bank moved to tighten restrictions on online financial products. Tencent slid 4.1 percent. Yanzhou Coal Mining Co. declined 1.6 percent as a gauge of energy stocks fell the most among industry groups.
The Shanghai Composite dropped 0.7 percent to 2,004.34 at the close, extending this week’s losses to 2.6 percent. Economists at UBS AG, Bank of America Corp., JPMorgan Chase & Co. and Nomura Holdings Inc. cut forecasts for Chinese growth after disappointing data fueled speculation the nation may not meet its 7.5 percent economic-expansion target for 2014.
“It looks like the market hasn’t fully priced in the economic slowdown,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “The market needs some time to digest the negative economic data and the risk of stocks further going down is still there.”
The Hang Seng China Enterprises Index slipped 0.3 percent, taking it down 19.5 percent from a Dec. 2 peak. The CSI 300 Index slid 0.8 percent to 2,122.84, led by energy companies. The Bloomberg China-US Equity Index slumped 2.7 percent yesterday.
Premier Li Keqiang indicated his confidence economic goals for 2014 are in reach at his annual press briefing in Beijing yesterday. Data later in the day showed factory output rose in January and February from a year earlier by the least since the global financial crisis.
A gauge of energy producers in the CSI 300 fell 1.5 percent, extending this week’s losses to 4.1 percent. Yanzhou Coal declined 1.6 percent to 6.06 yuan. China Shenhua Energy Co. lost 0.9 percent to 13.06 yuan.
The People’s Bank of China issued a notice to its Shenzhen and Hangzhou branches to halt virtual cards as well as payment operations using so-called Quick Response codes, citing safety risks, the person said, declining to be identified because the information is private. The virtual cards would have allowed consumers to buy goods from online retail websites on credit.
A Beijing-based press officer at Citic Bank said it hadn’t received the central bank notice and that it hasn’t issued any virtual cards yet. Two phone calls to PBOC’s news office weren’t returned. Jerry Huang, a director of investor relations for Tencent, didn’t immediately respond to an e-mail and a text message.
Citic Bank slumped 8.3 percent in Shanghai and 6.9 percent in Hong Kong. The lender, Tencent and Zhongan Online Property and Casualty Insurance Co. plan to offer one million Weixin virtual credit cards, according to a March 12 statement. Alibaba said on March 11 Citic Bank would offer one million cards on Alipay wallet.
A Citic Bank press official said the bank hasn’t received the PBOC notice and hasn’t issued any virtual credit cards yet. The official asked not to be identified citing company policy. The shares were suspended pending clarification of media reports, the lender said in a statement.
Tencent retreated HK$24 to HK$564 in Hong Kong.
— With assistance by Shidong Zhang, and Weiyi Lim