China’s stocks fell, capping the benchmark gauge’s first weekly decline in six weeks, as money-market rates jumped and economists forecast a report tomorrow will show export growth slowed last month.
China Petroleum & Chemical Corp. (386), the nation’s biggest refiner, slid 1.6 percent after the government said it will cut gasoline prices. Industrial Bank Co. dropped 1.7 percent, adding to an 8.1 percent slump this week. China Coal Energy Co. (601898) led declines among coal producers. China’s exports may have grown 7.4 percent, half of April’s 14.7 percent, based on the median estimate of 38 economists. The government will release industrial output, retail sales, and inflation data on June 9.
The Shanghai Composite Index (SHCOMP) fell for a seventh day, losing 1.4 percent to 2,210.90 at the close. It slid 3.9 percent this week, the first decline since the week ended April 26, amid concerns about slowing economic growth and tighter liquidity.
“Liquidity is tighter in the short term and that’ll weigh on sentiment,” said Dai Ming, a fund manager at Hengsheng Hongding Asset Management Co. in Shanghai, which manages $19 million. “The consensus expectations are that the economic data will be stable and there’s no surprise on either the upside or the downside. The market is expected to consolidate after the recent correction.”
The CSI 300 Index lost 1.7 percent to 2,484.16. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong sank 1.8 percent. China’s financial markets will be shut from June 10 to June 12 for the Dragon Boat Festival. The Bloomberg China-US 55 Index added 1 percent yesterday.
The Shanghai Composite has fallen 9.2 percent from this year’s high set on Feb. 6. It trades at 9.1 times 12-month estimated earnings, compared with the seven-year average of 15.5 times, data compiled by Bloomberg showed.
Trading volumes in the index were 10 percent lower than the 30-day average today, while 30-day volatility was at 13.7, the lowest since Dec. 3, according to data compiled by Bloomberg.
A gauge of financial companies including lenders fell 5.1 percent this week, the most in two months. Industrial Bank, part-owned by a unit of HSBC Holdings Plc, dropped 1.7 percent to 17.04 yuan. Shanghai Pudong Development Bank Co. (600000) dropped 1.1 percent to 9.35 yuan, extending losses to 11 percent this week. China Everbright Bank Co. slid for a fourth day, losing 0.7 percent to 2.98 yuan.
China Everbright Bank said its relationships with all trading counterparties are normal after Market News International reported that it failed to repay an interbank loan from Industrial Bank on time yesterday.
The nation’s overnight money-market rate climbed to a 16-month high on speculation a cash shortage will worsen as foreign capital inflows ease. The one-day repurchase rate climbed as much as 2.5 percentage points to 8.67 percent in Shanghai. The People’s Bank of China injected a net 160 billion yuan ($26 billion) of capital into the financial system this week, the most since February, data compiled by Bloomberg show.
Tight liquidity conditions pose risks as China’s economy is highly leveraged, according to Nomura Holdings Inc. Regulations on shadow banking activity and speculative capital inflows have likely reduced liquidity, while next week’s holiday has brought forward demand in early June, Nomura economist Zhang Zhiwei wrote in a report.
Sinopec, Asia’s biggest oil refiner, slid 1.6 percent to 6.60 yuan. PetroChina Co., the nation’s second-largest refiner, lost 1.1 percent to 8.28 yuan.
The government will cut gasoline prices by 95 yuan per ton and diesel prices by 90 yuan, the National Development and Reform Commission said in a statement yesterday.
China Coal, the nation’s second-largest coal producer, fell 1.6 percent to 6.32 yuan. Datong Coal Industry Co. (601001), the third largest, dropped 1.7 percent to 7.34 yuan.
A crackdown on fake invoices used to disguise money flows is probably cutting China’s trade figures, Nomura’s Zhang. Analysts in a separate survey last month said January-April export growth was overstated by 4 to 13 percentage points.
Inflation probably accelerated to 2.5 percent last month, while industrial output grew 9.4 percent, up from 9.3 percent in April, Bloomberg economist surveys showed.
--Zhang Shidong. Editors: Allen Wan, Chan Tien Hin
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