Chinese Stocks Fall After Industrial Profit Growth SlowsBloomberg News
China’s stocks fell, sending the benchmark index to its biggest loss in a week, after industrial profit growth slowed and benchmark money-market rates jumped.
Xinjiang Goldwind Science & Technology Co. and Dongfang Electric Co. slid more than 2 percent to drag down a sub-index of industrial companies. Touch-screen maker Shenzhen O-film Tech Co. plunged by a record as a measure of technology companies slumped the most among industry groups. Film company Huayi Brothers Media Corp. tumbled 5.3 percent after earnings. The seven-day repurchase rate, a gauge of funding availability in the banking system, rose the most in two months.
The Shanghai Composite Index slid 0.8 percent to 2,046.59 at the close. Industrial profits rose 9.4 percent in the first two months of the year, decelerating from 12.2 percent growth in December. The Shanghai measure has dropped 3.3 percent this year amid concerns a slowing economy will curb profits and the restart of initial public offerings will divert funds.
“We are back to market fundamentals with investors concerned about new IPOs, which might not have been fully priced in already, and soft economic data,” said Gerry Alfonso, a trader at Shenyin & Wanguo Securities Co. in Shanghai. “There is no obvious short-term catalyst for the equity market.”
The CSI 300 Index declined 0.7 percent to 2,155.71 today, while the Hang Seng China Enterprises Index added 0.3 percent. The ChiNext index plunged 3.5 percent.
Trading volumes in the Shanghai index were 0.6 percent above the 30-day average today, according to data compiled by Bloomberg. The measure is valued at 7.5 times projected 12-month earnings, approaching the record low set last week, Bloomberg data showed.
Nine out of the 10 industry groups in the CSI 300 dropped today, with the sub-index of industrial stocks sliding 1.2 percent. Xinjiang Goldwind, the country’s second-biggest maker of wind turbines, lost 3 percent to 9.91 yuan. Dongfang Electric, China’s second-biggest maker of power equipment, fell 2.6 percent to 12.54 yuan.
Profit at industrial companies reached 779.3 billion yuan ($125.4 billion) in the Jan.-Feb. period, the National Bureau of Statistics said in a statement today. The compares with 17.2 percent growth in the same period last year, data showed.
New share listings may resume from next month, the China Daily reported today, citing unidentified people familiar with the matter. The China Securities Regulatory Commission halted new share approvals in January after restarting them following a more than a one-year halt.
A gauge of technology stocks tumbled 2.5 percent, the most among the 10 industry groups. Shenzhen O-film slumped 9.8 percent to 43.39 yuan. People.cn Co., the online business of the Chinese Communist Party’s official newspaper, slid 6.6 percent to 71.31 yuan.
Huayi Brothers tumbled 5.3 percent to 24.73 yuan, dragging down the ChiNext to the lowest level since January. The company reported 2013 net income of 665.4 million yuan, compared with 244.4 million yuan in the previous year.
“As growth slows, growth sensitive stocks, such as the ChiNext, get hit,” Hao Hong, chief China equity strategist at Bocom International Holdings Co., said in an e-mailed response to questions today. “And brakes on credit growth make large-scale stimulus difficult to implement.”
The yuan fell less than 0.1 percent against the dollar as the central bank weakened the fixing amid signs China will struggle to meet its 7.5 percent growth target this year. The seven-day repo rate surged 95 basis points to 4.838, the most since Jan. 20.
— With assistance by Allen Wan, and Shidong Zhang