China Stock-Index Futures Fall as Bad Loans Rise Most Since 2005Bloomberg News
China’s stock-index futures fell as the biggest quarterly increase in banks’ bad loans since 2005 spurred concern the slowdown in the world’s second-largest economy is deepening.
Futures on the CSI 300 Index expiring in June, the most active contract, lost 0.1 percent to 2,134.20 as of 9:19 a.m. local time. Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp., the biggest lenders, may move. Nonperforming loans rose by 54 billion yuan ($8.7 billion) in the three months through March to 646.1 billion yuan, the highest level since September 2008, according to data released by the China Banking Regulatory Commission yesterday.
The Shanghai Composite Index dropped 1.1 percent to 2,024.97 yesterday. The ChiNext index, which is dominated by private companies in industries such as technology, fell 1.9 percent, extending losses to 19.6 percent since the February peak.
The Shanghai measure has lost 4.3 percent this year on concern the growth slowdown will curb earnings and the potential resumption of initial public offerings will divert funds.
China’s commerce ministry is expected to publish April foreign direct investment data at 10 a.m. Data on industrial output, retail sales and investment for April released this week all trailed analysts’ estimates. President Xi Jinping said last week that the nation needs to adapt to a “new normal” in the pace of economic growth.
China’s economy is far from a “Minsky Moment,” the China Securities Journal said today. The term is used to explain an asset collapse following the exhaustion of credit expansion. The moment is very likely to happen when bank credit to corporations reaches about 250 percent of the country’s gross domestic product, the paper said. The ratio for China was 140 percent in 2013, it said.
The Shanghai index has gained 0.7 percent this week, heading for the first weekly advance in a month, after the State Council said it will deepen reforms of the nation’s capital markets.
The CSI 300 Index declined 1.3 percent to 2,144.08. The Hang Seng China Enterprises Index fell 0.2 percent. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, retreated 0.8 percent in New York.
The Shanghai Composite is valued at 7.5 times 12-month projected earnings, compared with the five-year average multiple of 11.8, according to data compiled by Bloomberg. Trading volumes in the index were 20 percent below the 30-day average yesterday, according to data compiled by Bloomberg.
Investors betting on a collapse in NQ Mobile Inc.’s stock price were rewarded yesterday as the Chinese mobile-service provider plunged after delaying the filing of its annual report for a second time.
NQ Mobile tumbled 29 percent to a 14-month low of $7.27 in New York, extending to 68 percent its decline since short seller Carson Block, founder of Muddy Waters LLC, said in October the company was “a massive fraud.” NQ Mobile posted the biggest drop on the Bloomberg index of the most-traded Chinese shares in the U.S.