Mainland equities fall for fifth day in a row
SHANGHAI - Mainland stocks fell for a fifth day, the longest stretch in 16 months, as the government stepped up measures to cool property prices, and Greece and Portugal's credit downgrades spurred concerns global growth will slow.
Guangzhou Shipyard International Co led declines among companies that derive more than 30 percent of their sales from Europe. Poly Real Estate Group Co slid to a six-week low. Jiangxi Copper Co and Aluminum Corp of China Ltd dropped at least 0.9 percent as metal prices plunged.
"The stock market is facing systemic risk from the property industry, which accounts for about 25 percent of China's fixed-asset investment and 10 percent of GDP," said Larry Wan, deputy chief investment officer at KBC-Goldstate Fund Management Co, which oversees about $583 million. "The economy could be hurt further by exports, if the debt crisis in Europe deteriorates."
The Shanghai Composite Index dropped 7.60, or 0.3 percent, to 2900.33 at the close, the lowest close since Oct 12. The five-day losing streak is the longest since Dec 31, 2008.
The CSI 300 Index slid 0.4 percent to 3097.35. Futures on the CSI 300 expiring in May, the most active contract, added 0.4 percent to 3132.8.
Stocks have fallen over the past week on concern government measures to cool the property market will damp consumer spending and curb demand for raw materials.
European exposure
Greece's credit rating was cut three steps to BB+, or junk, by Standard & Poor's, the first time a euro member has lost its investment grade since the currency's 1999 debut. The Greek move came minutes after the rating company reduced Portugal by two steps to A-.
Guangzhou Shipyard, the smaller unit of China's biggest shipbuilder, slid 1.7 percent to 21.37 yuan. It relies on Europe for about 61 percent of sales in 2009, according to data compiled by Bloomberg. Xinjiang Chalkis Co, a ketchup maker, lost 2 percent to 14.41 yuan. The company counted on Europe for 98 percent of sales last year, according to Bloomberg data.
"We are facing the exit of stimulus packages domestically and worsening debt crisis overseas," said Zhang Qi, an analyst at Haitong Securities Co. "Both factors will weigh on risky assets such as stocks."
Commodities drop
Jiangxi Copper, China's biggest producer of the metal, lost 1.5 percent to 33.81 yuan. Aluminum Corp of China, the nation's biggest maker of the lightweight metal, slipped 0.9 percent to 11.54 yuan. Zhuzhou Smelter Group Co, China's biggest producer of refined zinc, retreated 3.7 percent to 12.87 yuan.
The London Metal Exchange Index of six industrial metals, including copper and zinc, plummeted 4.6 percent, its biggest decline since June 22. Crude oil for June delivery dropped 2.1 percent on Wednesday in New York to $82.44, the lowest settlement price since April 19.
A gauge of property stocks in the Shanghai Composite fell for a third day, losing 0.7 percent. Poly Real Estate, the second-largest developer by market value, retreated 1.9 percent to 12.45 yuan, the lowest since March 2009. China Merchants Property Development Co lost 0.8 percent to 17.66 yuan.
Bank of Beijing Co added 2.3 percent to 13.49 yuan after saying first-quarter profit rose 39 percent to 2.09 billion yuan.
China International Travel Service Corp rose 5.3 percent to 19.83 yuan after the company said first-quarter net income rose 82 percent on a year earlier to 109 million yuan.
Hang Seng slips
The Hang Seng Index dropping 1.5 percent to close at 20949.40, a five-week low. The Hang Seng China Enterprises Index decreased 1.5 percent to 11987.67.
Shares on the Hang Seng Index are priced at an average 13.9 times estimated earnings, down from 18 times on Nov 16 when the index closed at its highest level for 2009, according to Bloomberg data.
Concern that budget deficits in Europe may derail the global recovery and speculation China's government will tighten money supply have contributed to an 8.7 percent drop in the Hang Seng from its November high.
Bloomberg News
(China Daily 04/29/2010 page17)
