China’s stocks fell, with the benchmark measure heading for a weekly decline, on concern the economic slowdown is deepening. A gauge of Chinese-listed companies in Hong Kong was poised to enter a bear market.
China Shenhua Energy Co. (601088) and Shaanxi Coal Industry Co. led energy stocks to the biggest slump among industry groups. Great Wall Motor Co. slid 1.5 percent and Anhui Jianghuai Automobile Co. lost 1.8 percent.
The Shanghai Composite Index (SHCOMP) fell 0.5 percent to 2,009.55 as of 9:46 a.m. local time. TheHang Seng China Enterprises Index (HSCEI) retreated 0.4 percent, taking it down 20 percent from a Dec. 2 peak. A 20 percent drop would be considered by some traders as entering a bear market. Stocks have fallen amid concerns over slowing growth, a flood of new share sales and geopolitical tension between Russia and Ukraine. Data yesterday showed industrial production, investment and retail sales all trailing estimates in the January-to-February period.
“On top of the bad data from China, tensions between Ukraine and Russia are in the headlines again, and this adds up to the general uncertainty,” Paul Zemsky, the head of multi-asset strategies at ING U.S. Investment Management, which oversees $200 billion, said by phone yesterday.
The CSI 300 Index slid 0.3 percent to 2,133.77. The Bloomberg China-US Equity Index slumped 2.7 percent inNew York yesterday. Trading volumes in the Shanghai Composite were 10 percent below the 30-day average for this time of day, according to data compiled by Bloomberg.
The Shanghai index is valued at 7.65 times 12-month projected earnings, with 1.1 percent of the record low of 7.57 set on March 12, according to data compiled by Bloomberg.
Economists at UBS AG, Bank of America Corp., JPMorgan Chase & Co. and Nomura Holdings Inc. cut forecasts for Chinese economic growth after disappointing data fueled speculation the nation may not meet its 7.5 percent economic-expansion target for 2014.
Premier Li Keqiang indicated his confidence economic goals for 2014 are in reach at his annual press briefing in Beijing yesterday. Two hours later, data showed factory output rose in January and February from a year earlier by the least since the global financial crisis. The figures increase chances that China will take steps to boost growth including the first cut in almost two years to lenders’ reserve requirements, according to Societe Generale SA.
Some Chinese banks have started preparing for preferred stock issuance, the Shanghai Securities News reported, citing an unidentified person familiar with matter. The lenders need to wait for an announcement of official rules before submitting applications, it said.
China’s four-biggest lenders, which reported $126 billion of earnings in the 12 months through September, sank to the lowest valuations on record in Hong Kong trading yesterday. Industrial & Commercial Bank of China Ltd., the nation’s largest lender, fell below net assets for the first time on March 12.
The state-controlled banks known as China’s Big Four are getting squeezed by slower economic growth andrising bad debts just as policy makers open up the nation’s financial system to non-government competitors. Their shares have lost $70 billion of value this year, equivalent to the size of New Zealand’s entire stock market, even as U.S. and European peers rally.
“The market is concerned about future profitability” in China, Diana Choyleva, the head of macroeconomic research at Lombard Street Research, said by phone from London on March 11. “I would not be investing Chinese bank shares just yet. They have further to go.”
Baidu (BIDU) Inc. tumbled, leading Chinese stocks trading in New York to a five-week low yesterday. Baidu, owner of the nation’s biggest Internet search engine, slid to the lowest in a month. Home Inns & Hotels Management Inc. (HMIN), which runs China’s biggest budget hotel chain, plunged 11 percent in its biggest decline since September 2011, while E-Commerce China Dangdang Inc., the country’s largest online bookseller, sank 5.8 percent.