Bloomberg News

China Stocks Drop for First Time in Four Days on Profit Concern

July 04, 2012

China Stocks Drop for First Time in Four Days on Profit Concern

Sany Heavy, the nation’s biggest machinery maker, fell 4.1 percent to 12.85 yuan, the lowest close since March 30. Photographer: Forbes Conrad/Bloomberg

Chinese stocks fell for the first time in four days as concern that construction activity is faltering dragged industrial companies lower, overshadowing a rally by energy producers.

Taiyuan Heavy Industry Co. (600169) fell to the lowest level in 3 1/2 years after saying it will post a first-half loss. Sichuan Hongda Co. plunged 9.2 percent after the government ordered it to halt building a plant that drew protests. China Shenhua Energy Co. advanced 1.3 percent after oil jumped more than 4 percent in New York yesterday.

The Shanghai Composite Index (SHCOMP) fell 1.88 points, or 0.1 percent, to 2,227.31 at the close. The CSI 300 Index slipped 0.2 percent to 2,464.92. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, added 1.3 percent at the close in New York.

“There’s a lack of liquidity in the market on concerns about the economy,” said Cao Xuefeng, an analyst at Huaxi Securities Co. in Chengdu. “In the near term, any gains will be limited and trading is likely to be range-bound.”

The Shanghai gauge is little changed this month after plunging 6.2 percent in June as signs the economic slowdown is deepening overshadowed an interest-rate cut on June 8. The gauge, which has risen 1.3 percent this year, trades at 9.7 times estimated profit, compared with the average of 17.5 since Bloomberg began compiling the data in 2006.

Taiyuan dropped 8.1 percent to 3.18 yuan, the lowest close since Jan. 5, 2009. The company said it probably lost about 90 million yuan in the first half of the year because of falling demand and prices.

Services Industries

Sany Heavy, the nation’s biggest machinery maker, fell 4.1 percent to 12.85 yuan, the lowest close since March 30.

China’s services industries expanded in June at the slowest pace in 10 months as growth in new business weakened, a private survey showed.

The purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics fell to 52.3 in June from a 19-month high of 54.7 in May, the companies said today. That’s the largest decline since August. The result contradicts an official report yesterday showing an acceleration in non- manufacturing industries last month in the world’s second- biggest economy.

Sichuan Hongda, a zinc producer, plunged 9.2 percent to 7.27 yuan, the lowest close since Feb. 3, 2009, after the company said it received an order from Shifang government to halt construction of its molybdenum and copper project. The plant was the site of clashes between police and demonstrators who argued the project would pollute the environment.

Coal Producers

Shenhua Energy, the nation’s largest coal producer, advanced 1.3 percent to 22.39 yuan. Yanzhou Coal Mining Co., the fourth-largest, gained 0.6 percent to 19.40 yuan, the highest close since June 26.

Oil climbed 4.7 percent in New York yesterday as Iran said sanctions threaten the Persian Gulf country’s national security.

China may see a “moderate” expansion in bank lending this year, the Xinhua News Agency cited a report from the China Banking Association as saying. New lending this year will be 8 trillion yuan ($1.26 trillion) to 8.5 trillion yuan, compared with 7.47 trillion yuan in 2011, Xinhua cited the report as saying.

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net


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