China’s Stocks Decline as Oil Share Losses Overshadow Trade Data

China’s stocks fell for a second day as declines for oil and consumer-staples companies overshadowed data showing exports rose more than estimated.

Inner Mongolia Yili Industrial Group Co. slid 6.3 percent. China Petroleum & Chemical Corp., the biggest refiner, retreated 1.5 percent after Brent futures extended their slump to the lowest in almost four years. Stocks came off their lows as coal producers rallied after the price of the fuel in Qinhuangdao Port advanced for a second week.

The Shanghai Composite Index fell 0.4 percent to 2,366.01 at the close, paring a loss of as much as 1.4 percent. The index has gained 12 percent this year. The Hang Seng China Enterprises Index slipped 0.2 percent to 10,284.90, paring a drop of as much as 1.3 percent, as investors assessed protests in Hong Kong, where hundreds of men attempted to break through barricades erected by pro-democracy protesters.

“The stock market has reached a peak for now,” said Zhang Yanbing, an analyst at Zheshang Securities Co. in Shanghai. “Even with the good data today, it can’t rise further -- U.S. stocks were bad and there are more data this week, signaling uncertainty for the market.”

The Dow Jones Industrial Average slid 2.7 percent last week, the most since August, while European stocks completed their biggest weekly drop since May 2012. European Central Bank President Mario Draghi clashed with Germany’s finance minister over the steps needed to revive growth in the euro area, while Federal Reserve officials have said the U.S. economy may be at risk from a global slowdown.

Oil Slump

Hong Kong’s Hang Seng Index advanced 0.2 percent today. The CSI 300 Index lost 0.5 percent. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, slid 2.3 percent in New York on Oct. 10.

Sinopec slumped to the lowest level since Aug. 7 in Shanghai. PetroChina Co., the biggest oil producer, lost 0.5 percent. Iraq joined Saudi Arabia and Iran in cutting crude selling prices as Brent futures extended their slump to the lowest in almost four years. West Texas Intermediate fell after its biggest weekly loss since January.

Yili Industrial, the biggest dairy producer by sales, fell the most since June. The shares pared a loss of as much as 10 percent. Yili senior management isn’t aware of any quality issue and third-quarter business is “positive,” Shenyin & Wanguo Securities Co. analyst Jin Feng said in a phone interview after checking with the company.

Trade Data

Even with today’s loss, the Shanghai index is headed for its biggest yearly gain since 2009 amid speculation reform measures will stem an economic slowdown and an exchange link with Hong Kong may fuel fund inflows. It’s valued at 8.5 times 12-month projected earnings, compared with the low of 7.2 in March, according to data compiled by Bloomberg. Trading volumes were 5.9 percent above the 30-day average.

Exports increased 15.3 percent from a year earlier, the Beijing-based customs administration said today, compared with the 12 percent median estimate in a Bloomberg News survey of analysts. Imports rose 7 percent, against projections for a 2 percent decline, leaving a trade surplus of $31 billion. China will release inflation data on Oct. 15, while money supply data could come as early as today.

“The market -- both in the mainland and Hong Kong -- needed some time to digest the economic figures from the morning session, which were relatively strong,” said Gerry Alfonso, a trader at Shenyin & Wanguo. “Fundamentals remain strong as investors seem to be looking through all the current noise.”

HK Protests

The fund managers running the X-trackers Harvest CSI 300 China A-Shares ETF at Deutsche Asset & Wealth Management are facing a problem their rivals would love to have. They’re luring too much money.

In the span of five days last month, the U.S.-based exchange-traded fund pulled in $130 million, sending assets surging by 33 percent to $515 million and nearly exhausting its Chinese government-imposed A-share purchasing quota. Managers were forced to get creative. They limited new creations and borrowed quota from another fund to avoid closing the year-old ETF to inflows and keep a potentially disruptive premium to underlying assets from developing.

In Hong Kong, a third week of rallies tried the patience of truck and cab drivers. A line of cabs and trucks drove right up to some barricades earlier this afternoon, with banners on their hoods saying “Enough is Enough.” Scuffles broke out with police and some men, who were wearing face masks, were detained.

The pro-democracy protests have polarized the city, with thousands of people rallying for free elections, while earning the ire of retailers and drivers. Hong Kong Chief Executive Leung Chun-ying said yesterday that there is “almost zero chance” China will change its decision to vet candidates in the city’s leadership contest in 2017.

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE