China H-Shares Drop as Energy Companies Fall, Great Wall Slumps

Updated on
  • Momentum easing as stocks were pushed to high level: Huaxi
  • Shanghai benchmark gauge retreats from highest in nine months

Chinese shares listed in Hong Kong fell the most in two weeks, dragged down by energy companies on a drop in oil prices. Great Wall Motor Co. slumped the most since January after reporting quarterly earnings.

The Hang Seng China Enterprises Index lost 1.4 percent at the close, with China Oilfield Services Ltd. and China Petroleum & Chemical Corp. among the biggest decliners as crude sank for a third day on speculation Russia won’t join OPEC’s planned output cuts. Great Wall Motor tumbled 11 percent as at least three analysts cut their rating on the stock, with Nomura Holdings Inc. saying the automaker’s profit recovery may be temporary. The Shanghai Composite Index ended three days of gains that took it to its highest level since January.

The H-share gauge has slipped 3.6 percent since reaching a nine-month high in September as inflows through the exchange link with Shanghai slowed. The People’s Bank of China is planning to add extra oversight to lenders’ off-balance-sheet wealth management products, a pool that Citigroup Inc. estimates at 13 trillion yuan ($1.9 trillion). Reported curbs on the use of WMP proceeds to buy equities sparked a stock plunge in late July.

"The momentum on H shares is receding now as stocks have already been pushed to a relatively high level,” said Wei Wei, an analyst at Huaxi Securities Co. in Shanghai. "The appeal is dwindling. The economy isn’t likely to pick up significantly this year and it’s still in an L-shaped range."

The Hang Seng China Enterprises Index closed at 9,698.85. The Hang Seng Index lost 1 percent, while the Shanghai Composite dropped 0.5 percent.

Early indicators of China’s economy for October have presented a mixed picture, with confidence among small and medium-sized companies holding up, while larger firms are less confident in the outlook. With the economy expanding at 6.7 percent in the first three quarters, policy makers are pledging to curb debt expansion and rein in surging home prices in the nation’s biggest cities. The ruling Communist Party is meeting this week in Beijing, and the focus so far has been on Xi Jinping’s anti-graft fight.

China Oilfield Services, China Petroleum & Chemical and PetroChina Co. fell at least 2.1 percent. Oil futures declined as much as 1.5 percent in New York after closing below $50 a barrel Tuesday for the first time in more than a week.

Belle International Holdings Ltd. extended a two-day drop to 13 percent as UBS AG said the inventory of the women’s footwear retailer is at an “alarming level.”

Great Wall Motor, China’s biggest maker of SUVs, fell the most since Jan. 29. JPMorgan Chase & Co., Bocom International Holdings Ltd. and Nomura lowered their ratings on the stock even after the automaker posted a 53 percent increase in third-quarter earnings from a year earlier. Nomura cited narrowing gross profit margins and disappointing sales of SUVs.

In mainland trading, coal stocks weighed on the market, with an index of energy firms falling 1.4 percent for the biggest decline among industry groups. The National Development and Reform Commission has urged coal miners to meet temporary increased production limits as soon as possible to boost supplies and stabilize prices, according to two people with knowledge of the matter.

Shaanxi Coal Industry Co. retreated 4.6 percent after jumping 20 percent over the past two days. China Coal Energy Co. slid 4 percent, snapping a two-day, 18 percent gain.

— With assistance by Shidong Zhang, Justina Lee, and Fox Hu

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