China’s Stocks Fall for Steepest Weekly Loss in 3 Months

China’s stocks fell, sending the benchmark index to its steepest weekly loss in three months, after the nation’s biggest liquor maker reported slowing profit growth and concern grew that new share sales will divert funds.

Kweichow Moutai Co. plunged 6.3 percent after net income growth slowed to 3 percent in the first quarter from 21 percent in the same period last year. Huayi Brothers Media Corp. slid 2.6 percent as the ChiNext index of small companies retreated for a fifth day, its longest losing streak since June. Guanghui Energy Co. jumped the most in two months after announcing plans to sell preferred shares. The yuan slipped for a sixth day to the lowest level since October 2012.

The Shanghai Composite Index fell 1 percent to 2,036.52 at the close. It slumped 2.9 percent this week, the biggest loss since the week ending Jan. 10, after a manufacturing gauge signaled a contraction and the regulator started to post initial public offering prospectuses,boosting speculation new share sales will resume after a three-month halt.

“The main pressure is from upcoming new share sales and weak growth,” said Dai Ming, a money manager at Hengsheng Hongding Asset Management Co. in Shanghai, which oversees about $193 million. “Corporate earnings are lackluster so far so there is not much catalyst for the market.”

The CSI 300 Index lost 1 percent to 2,167.83. The Hang Seng China Enterprises Index retreated 1.5 percent. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, added 0.1 percent yesterday.

IPO Outlook

Trading volumes in the Shanghai index were 12 percent below the 30-day average today, according to data compiled by Bloomberg. The measure is valued at 7.5 times 12-month projected earnings, compared with the five-year average multiple of 12, Bloomberg data showed.

The total number of companies seeking to go public has climbed to 97 after 22 more prospectuses were posted on the website of the China Securities Regulatory Commission yesterday. The 22 companies include budget carrier Spring Airlines Co., which plans to sell as much as 100 million shares.

The securities regulator hasn’t approved any IPO sales since January as it reforms the process to make offerings more market-oriented. China will release rules for an IPO registration system by the end of this year, the official Xinhua News Agency reported earlier this month, citing CSRC Chairman Xiao Gang.

The ChiNext index in Shenzhen slid 2.1 percent, extending losses this week to 6.2 percent. Huayi Brothers slid 2.6 percent. Hubei Dinglong Chemical Co. tumbled 7.7 percent.

Economic Concern

China’s overnight money-market rate headed for its biggest weekly gain in a month as tax payments and regulatory requirements drained cash in the banking system.

The yuan dropped 0.05 percent to 6.2521 per dollar in Shanghai, China Foreign Exchange Trading System prices show. It touched 6.2565 earlier, the weakest level since Dec. 12, 2012, and has declined 0.48 percent since April 18.

China’s currency has weakened on signs a slowdown in the world’s second-largest economy is deepening. The country’s growth will weaken further, Credit Suisse Group AG’s Chief Regional Economist Dong Tao said at a conference in Hong Kong yesterday, adding that he’s pessimistic on the short-and medium-term outlooks.

A preliminary reading for the Purchasing Managers’ Index for manufacturing was at 48.3 in April, from a final figure of 48 in March, HSBC Holdings Plc and Markit Economics data showed this week. Fifty is the dividing line between expansion and contraction.

Austerity Plan

A gauge of consumer-staples producers in the CSI 300 slumped 3.1 percent, the biggest loss among the 10 industry groups. Kweichow Moutai, the biggest baijiu liquor maker, tumbled 6.3 percent, the biggest decline since Sept. 2.

Wulianye Yibin Co., the second-largest baijiu maker, dropped 3.5 percent. Shares of high-priced liquor makers have fallen over the past year as President Xi Jinping stepped up efforts to crack down on corruption and ban government officials from buying luxury goods at public expense.

PetroChina Co., the nation’s biggest oil company, declined 0.7 percent after saying first-quarter profit fell 4.9 percent. China Petroleum and Chemical Corp., the refiner known as Sinopec, slumped more than 2 percent in Shanghai and Hong Kong before the release of its earnings report on April 28.

Of the 831 companies in the Shanghai Composite, 260 have released first-quarter earnings, reporting an average 7.1 percent profit growth, according to data compiled by Bloomberg. Industrial companies are scheduled to release earnings for March and the first quarter on April 27.

Guanghui Energy climbed 4.6 percent. The Xinjiang-based company plans to raise up to 5 billion yuan ($799 million) through the sale of as many as 50 million preferred shares in a private placement. Net proceeds will be used for a railway project and working capital, it said.

— With assistance by Shidong Zhang

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