China's Stocks Slump Most in Three Weeks as Oil Producers Slide

  • Energy shares led equity rebound over past three months
  • Gains in home prices fueling concern about curbs, JK Life says

Chinese stocks fell by the most in three weeks, led by energy producers and property developers, as oil tumbled and accelerating home prices sparked concern the government will act to cool the property market.

The Shanghai Composite Index fell 1.4 percent at the close. China Petroleum & Chemical Corp. lost 3 percent while Yanzhou Coal Mining Co. slid 2 percent. Crude slumped the most in two months in New York after talks between major oil producers ended in Doha without any agreement on limiting output. Average new-home prices rose 1.9 percent from February, when they advanced 0.6 percent, according to SouFun Holdings Ltd., the owner of China’s biggest property website.

Falling oil would undercut one of the biggest drivers in Chinese stocks this year. A gauge of energy shares jumped 11 percent in the three months through Friday, the most among industry groups, as crude rebounded. Housing demand helped boost growth in the first quarter, with output of real estate services adding 9.1 percent from a year earlier, the statistics bureau said over the weekend. China’s economy grew 1.1 percent from the previous quarter, the lowest print since the series became available in 2011.

“The tumble in oil prices has significantly dented the appetite for risk assets globally and we are also impacted by the negative sentiment,” said Wu Kan, a fund manager at JK Life Insurance in Shanghai. “The surge in property prices is irrational and has actually deepened investors’ worry that it will lead to more crackdown measures.” Wu has kept his equity positions at about 40 percent of asset allocations.

The Shanghai Composite closed at 3,033.66, the lowest since April 12. The Hang Seng China Enterprises Index retreated 1.4 percent at the close in Hong Kong, with Huaneng Power International Inc. leading declines. The Hang Seng Index fell 0.7 percent.

A gauge of information-technology companies on the CSI 300 Index slumped 2.2 percent, the biggest loss among the 10 industries on the measure. Aisino Co., a maker of telecom equipment and tax-control systems, plunged 5.7 percent. East Money Information Co., a provider of financial data, fell 5 percent.

House Prices

China State Construction Engineering Corp. paced losses by property-related companies. New-home prices excluding affordable housing climbed in 62 cities, compared with 47 in February, among the 70 cities tracked by the government, the National Bureau of Statistics said Monday. They dropped in eight cities, compared with 15 a month earlier.

“There’s profit-taking in property stocks after investors priced in strong home sales in previous weeks,” said Linus Yip, strategist at First Shanghai Securities Ltd. in Hong Kong.

Monday’s losses in Chinese stocks come after a string of better-than-estimated data helped send the Shanghai Composite to a three-month high last week. The gauge capped a 3.1 percent gain for the week after the government said the economy grew 6.7 percent in the first quarter from a year earlier, in line with analyst estimates.

“The market had been pricing a bit of upside in China GDP numbers in the past two weeks,” said Zhou Hao, an economist at Commerzbank AG in Singapore. “So there’s a buy-the-rumor, sell-the-fact phenomenon here. We don’t have any data in next two weeks so I think market is retreating a little bit after the upbeat news.”

Economy Questions

Quarter-on-quarter data on China’s economy released over the weekend will add to skepticism about the accuracy of the nation’s figures, according to Bloomberg Intelligence economists Tom Orlik and Fielding Chen. Based on the accumulated quarter-on-quarter data over the last year, annual growth in first quarter was just 6.3 percent -- substantially below the official 6.7% reading for year-on-year growth, they said.

“China’s growth rates for quarter-on-quarter and year-on-year GDP for the past year don’t match,” Orlik and Chen wrote in a report. “Explaining the inconsistency between the two data points is tough to do.”

Tsinghua Tongfang Co., a computer company, slid 4.7 percent from a three-month high, as technology shares declined. The ChiNext gauge of small-company shares retreated 1.9 percent.

— With assistance by Shidong Zhang, and Fox Hu

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