China’s H-Shares Decline After Imports Fall More Than Estimated

  • Report shows imports extend longest losing streak in 6 years
  • Rising margin debt shows investors returning to market

Why China's Imports Plunged in September

Chinese stocks fell for the first time in three days in Hong Kong trading, led by commodity producers, as data showing a slump in imports deepened concern about the outlook for the world’s second-biggest economy.

The Hang Seng China Enterprises Index, the best-performing Asian stocks measure in the past month, dropped 1 percent to 10,437.69 at the close. PetroChina Co. and Anhui Conch Cement Co. retreated more than 1.7 percent. A trade report showed imports plunging 17.7 percent in September, an 11th straight decline, compared with an estimate for a 16.5 percent drop. Exports weakened less than forecast. The Shanghai Composite Index rose 0.2 percent to 3,293.23 at the close as technology and consumer companies rallied.

oct 13 shcomp

“The data are not good but still acceptable to investors,” said Wu Kan, a Shanghai-based fund manager at JK Life Insurance Co., who’s adding to holdings. “As long as the data remain sluggish, the market will be anticipating growth-boosting measures from the government.”

The CSI 300 Index slipped 0.1 percent. The Hang Seng Index dropped 0.6 percent.

Stimulus Spur

H-shares halted a 14 percent rally from a September low. Chinese stocks have rebounded amid speculation that China’s central bank will reduce interest rates or reserve-requirement ratios and policy makers will introduce more measures to boost growth. The government announced over the weekend it will expand a relending trial to nine more cities and provinces, while Premier Li Keqiang said policy makers will increase fiscal support for shantytown redevelopment.

Investors are returning to the China market, with trading volumes in Shanghai jumping to the highest level since Sept. 2 on Monday, while margin debt posted its biggest gain since December.

The drop in imports compared with the forecast for a 16.5 percent decline and the previous month’s 14.3 percent decrease, according to data from the customs administration on Tuesday. Overseas shipments fell 1.1 percent, compared with a 6.1 percent decline in August and the forecast for a 7.4 percent slide. The trade surplus was 376.2 billion yuan ($59.4 billion).

Waning Demand

Imports show waning domestic demand that won’t immediately be countered by exports, which may spur more stimulus to help support growth, economists at Huabao Trust Co. and Everbright Securities Co. said in interviews.

PetroChina, the nation’s biggest oil company, dropped 2 percent in Hong Kong and slid 1 percent in Shanghai. Anhui Conch, China’s biggest cement maker, lost 1.8 percent in Hong Kong.

Inflation data are due Wednesday. Growth in consumer prices probably slowed to 1.8 percent, according to a Bloomberg survey. Data on third-quarter economic growth will be released next week.

The Communist Party of China Central Committee will hold a key meeting during Oct. 26-29 to deliberate on an economic and social development plan for China over the next five years, the official Xinhua News Agency reported.

Investors should buy stocks that reflect the new economy before the fifth plenum and avoid traditional heavy industry sectors that face oversupply, China Southern Fund Management Co. strategist Yang Delong said by phone on Monday.

A gauge of technology stocks on the CSI 300 climbed 1.5 percent, the biggest gain among industry groups. Co., the online business of the Chinese Communist Party’s official newspaper, jumped by the 10 percent daily limit. Bright Dairy & Food Co. gained 2.7 percent, pacing gains for consumer staples companies.

— With assistance by Shidong Zhang

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