Bloomberg News

China’s Stock-Index Futures Drop Before Manufacturing Report

October 23, 2013

China’s stock-index futures fell before the release of a preliminary manufacturing index.

Futures on the CSI 300 Index (SHSZ300) expiring in November slipped 0.3 percent to 2,412.40 as of 9:16 a.m. China Merchants Property Development Co. (000024) may decline after third-quarter profit slid 12 percent from a year earlier. Huaxia Bank Co. may be active after signing agreements to provide financial services at the Shanghai Free-Trade Zone. Chongqing Brewery Co. may advance after it reported a 24 percent increase in nine-month profit.

The Shanghai Composite Index (SHCOMP) dropped 1.3 percent to 2,183.11 yesterday, after money-market rates jumped and as a gauge of smaller companies plunged on concern valuations were excessive. The People’s Bank of China won’t conduct repurchase or reverse repurchase operations today, according to a trader at a primary dealer required to bid at the auctions.

The CSI 300 Index fell 1.1 percent to 2,418.49 yesterday. The Hang Seng China Enterprises Index (HSCEI) retreated 1.8 percent. The Bloomberg China-US Equity Index fell 3 percent in New York.

HSBC Holdings Plc and Markit Economics are due to release a preliminary manufacturing index for this month at 9:45 a.m. The measure probably rose to 50.4 from 50.2 in September, according to the median estimate of 16 economists in a Bloomberg survey. The number of 50 divides expansion and contraction.

President Xi Jinping said yesterday the nation’s economic growth and other key indicators are within targets, China Central Television reported. China will discuss deepening of reforms at the third plenum, Xi was cited as saying by CCTV.

Rate Outlook

The nation’s benchmark money-market rate jumped the most since July yesterday as the People’s Bank of China refrained from adding funds to markets. The rate will decline as policy makers take steps to make cash available for the tax season, according to TCW Group Inc.

The increase is temporary because the central bank will provide cash to keep borrowing costs steady ahead of the plenum, said David Loevinger, an emerging-market analyst at TCW.

The Shanghai Composite trades at 8.6 times, compared with the seven-year average of 15.4, according to data compiled by Bloomberg. The index has rebounded 12 percent from its four-year low on June 27 on speculation the government will take reform measures to sustain long-term economic growth.

Chinese equities traded in New York slumped the most in four months yesterday as Internet companies from Baidu Inc. (BIDU:US) to YY Inc. fell on concern third-quarter earnings will trail estimates. Baidu is set to report on Oct. 29 that third-quarter profit (BIDU:US) dropped 1 percent from a year ago while sales rose 40 percent, according to the average estimate of at least nine analysts compiled by Bloomberg.

--Zhang Shidong. Editors: Allen Wan, Richard Frost

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net


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