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Stocks at six-week low point on US spending

By Zhang Shidong | China Daily | Updated: 2011-08-04 08:24

SHANGHAI - Stocks on the Chinese mainland fell on Wednesday, driving the benchmark index to the lowest in six weeks, as the first drop in US consumer spending in almost two years increased concern Chinese exports to the world's biggest economy will slow.

Air China Ltd fell 1.9 percent on speculation a slide in US spending will reduce demand for travel. CSR Corp, China's biggest train maker, declined to a 10-month low after the company postponed a vote on plans to sell shares in a private placement.

Xining Special Steel Co led advances for steelmakers after its first-half net income jumped and the Economic Observer reported the government is discussing measures to eliminate steel capacity.

"The market has turned pessimistic about the outlook for both the global and the domestic economies," said Sun Chao, an analyst at Citic Securities Co in Shanghai, the biggest listed brokerage.

"We still have to assess how much earnings growth will be negatively affected by the economic slowdown."

The Shanghai Composite Index dropped 0.77 point, or less than 0.1 percent, to 2678.49. The CSI 300 Index fell 0.1 percent to 2954.87.

Air China, the nation's largest international carrier, fell 1.9 percent to 9.40 yuan ($1.45). China Southern Airlines Co, the biggest carrier by fleet size, lost 2.7 percent to 7.82 yuan. China Eastern Airlines Corp, the second-largest carrier, dropped 2.7 percent to 5.12 yuan.

US Commerce Department figures showed purchases slid 0.2 percent in June after a 0.1 percent gain in May. The median estimate of 77 economists surveyed by Bloomberg News had called for a 0.1 percent increase.

Anhui Jianghuai Automobile Co paced declines for automakers, losing 1.7 percent to 9.67 yuan, the lowest since May 30. Chongqing Changan Automobile Co slid 0.8 percent to 4.84 yuan.

China might lift fuel-efficiency requirements used for determining if small cars are eligible for a 3,000-yuan subsidy, the Economic Information Daily reported, citing unidentified people.

CSR slid 0.9 percent to 5.44 yuan, its lowest since Sep 27. The train maker postponed a shareholder vote by about eight weeks on plans to sell 11 billion yuan of new equity to State-backed investors, it said in a filing on Tuesday.

CSR is having talks with shareholders on its prospects after a July 23 train collision killed 40 people. The stock has lost 18 percent since the crash.

A report on China's services trade added to evidence of a moderate economic slowdown. The non-manufacturing purchasing managers' index rose to 59.6 last month from 57 in June, the China Federation of Logistics and Purchasing said.

A reading above 50 indicates an expansion. The index is based on a survey of companies in industries including transport, real estate, retailing and catering.

Bloomberg News

(China Daily 08/04/2011 page17)

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