China’s Stocks Drop For First Time in Five Days; Developers Fall

 

 

Jiangxi Copper Co. and Yunnan Aluminium Co. led declines for metal producers on concern the European debt crisis may worsen after Greek Prime Minister George Papandreou agreed to step down. Anhui Conch Cement Co., the largest producer of the building material, slid 1.8 percent after Phoenix TV reported Premier Wen Jiabao as signaling the government won’t alter its property curbs until home prices drop. Angang Steel Co. paced gains for steelmakers after Shanghai Securities News reported the government will release a five-year plan for the industry.

 

 

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, fell 9.7 points, or 0.4 percent, to 2,518.6 3 at 1:05 p.m. local time. The measure jumped 2.2 percent last week, the most among major Asian stock markets. The CSI 300 Index lost 0.7 percent to 2,744.59today.

 

 

“Stocks are fluctuating today because last week’s gains were excessive,” said Wei Wei, an analyst at West China Securities Co. in Shanghai. “I wouldn’t expect a big plunge and any decline should be minimal as there’s not much bad news.”

 

 

The Shanghai Composite has fallen 10 percent this year after the central bank raised interest rates three times and lifted the reserve-requirement ratio to curb inflation that’s near a three-year high. It’s valued at 11.8 times estimated earnings, compared with a record low of 10.8 times on Oct. 21, according to weekly data compiled by Bloomberg.

 

 

 

 

Anhui Conch Cement dropped 2 percent to 19.49 yuan. The stock jumped 19 percent last year on speculation the company would benefit from rising cement demand for the construction of low-income housing. Huaxin Cement Co. declined 2.2 percent to 2.14 yuan today.

 

 

China won’t waiver over property market curbs with the aim of bringing home prices to a reasonable level, Wen said in Russia, according to Phoenix TV. Property developers are hoping in vain for a loosing of regulations and monetary policy which would allow them to raise property prices, Ma Guangyuan, an economist with the Chinese Academy of Social Sciences, wrote in a commentary in the China Daily today.

 

 

A gauge of property companies in the Shanghai Composite slid 1 percent, the most among the five industry groups. China Vanke Co., the nation’s biggest listed property developer, declined 1.1 percent to 8.70 yuan. Gemdale Corp. fell 3.6 percent to 4.84 yuan. The government this year increased down- payment requirements and mortgage rates on some homes and imposed housing purchase restrictions in about 40 cities.

 

 

 

 

China’s inflation rate may be 5.5 percent in October and more than 5 percent in November and December, the China Securities Journal reported today, citing Fan Jianping, director of economic forecasting at the State Information Center. Inflation probably eased to 5.4 percent in October, from 6.1 percent in September, according to the median forecast of economists surveyed by Bloomberg before a statistics bureau report on Nov. 9.

 

 

“There is uncertainty before the macroeconomic data on Wednesday, so investors are selling,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “This is especially so after China stocks gained last week.”

 

 

The Shanghai Composite has rebounded 9 percent from this year’s low on Oct. 21, after the government announced measures to help small businesses through easier access to bank loans and said it will lower the threshold for payment on value-added and business taxes for small companies.

 

 

 

 

Goldman Sachs Group Inc. advised buying Chinese stocks as the nation’s economy will grow “close to trend” in the coming quarters, spurred by easing credit and government measures to help small companies.

 

 

“We are recommending a long position in Chinese equities,” Goldman Sachs strategists said in a note to clients. “The market may be poised to continue to shift from the pricing in of hard-landing scenarios to the pricing in of some policy- driven relief and reacceleration.”

 

 

China’s central bank probably won’t follow Group of 20 counterparts such as Brazil and Australia in cutting interest rates unless there is a deeper slowdown in manufacturing and inflation, based on historical patterns tracked by Bloomberg.

 

 

“There’s no urgency for a rate cut,” Ken Peng, senior economist for China at BNP Paribas SA, said in an interview. “Shifting to a loose monetary policy needs a consensus among government officials, which will only be reached when economic growth weakens more obviously.”

 

 

 

 

Jiangxi Copper, the nation’s biggest copper producer, slid 1.7 percent to 28.20 yuan. Yunnan Copper declined 1.7 percent to 19.45 yuan. Yunnan Aluminium lost 1.6 percent to 6.84 yuan.

 

 

Speculators reduced wagers on higher commodity prices for the first time in four weeks on mounting concern that Europe’s failure to contain its debt crisis will slow economic growth and demand for raw materials.

 

 

Money managers cut combined net-long positions across 18 U.S. futures and options by 3.9 percent to 798,787 contracts in the week ended Nov. 1, Commodity Futures Trading Commission data show. The Standard & Poor’s GSCI Index of 24 raw materials tumbled 14 percent since reaching a 32-month high in April.

 

 

Papandreou met with Antonis Samaras, the leader of the main opposition party, and “agreed to form a new government with the aim of leading the country to elections immediately after the implementation of European Council decisions on October 26,” according to a statement from the office of President Karolos Papoulias. Papandreou has already said he won’t lead this new government, the statement said. Europe is China’s biggest export market, accounting for more than a fifth of its overseas shipments.

 

 

 

 

Angang Steel gained 0.7 percent to 5.46 yuan. Wuhan Iron & Steel Co. advanced 0.6 percent to 3.54 yuan.

 

 

China will soon release a plan to develop the nation’s steel industry for the five years through 2015, Shanghai Securities News reported today, citing Luo Tiejun, deputy director general of the raw material department at the Ministry of Industry and Information Technology. The government will “in principle” no longer build steel plants in the Bohai region or Yangtze Delta area, the newspaper cited Luo as saying.