China's Stocks Fall Most in 2 Weeks on Services, US Jobs Data - Bloomberg

By Weiyi Lim - 2012-06-04T01:26:55Z

China’s stock-index futures fell, signaling declines for equities, after the nation’s non- manufacturing industries expanded at a slower pace for a second month and fewer U.S. jobs were added than economists estimated.

Futures on the CSI 300 Index (SHSZ300) expiring in June, the most active contract, lost 1.2 percent to 2,593.80 as of 9:18 a.m. local time. PetroChina Co., the second-largest oil refiner, may drop as the Shanghai Securities News reported fuel prices may be cut and JPMorgan Chase & Co. lowered its estimate for China’s gross domestic product for the second time in a month.

The Shanghai Composite Index (SHCOMP) rose 1.20 points, or 0.1 percent, to 2,373.44 on June 1. About 7.77 billion shares changed hands on June 1, 3 percent lower than the daily average this year. The CSI 300 Index gained less than 0.1 percent to 2,633. The Bloomberg China-US 55 Index (CH55BN), the measure of the most- traded U.S.-listed Chinese companies, tumbled 3.4 percent to 87.22 on June 1 in New York, the biggest slump since Nov. 21.

The Shanghai Composite has climbed 7.9 percent this year on optimism the government will ease monetary policies and accelerate approvals of infrastructure projects to spur growth. Stocks in the measure are valued at 10.2 times estimated earnings, compared with a record low of 8.9 times on Jan. 6, according to weekly data compiled by Bloomberg.

The purchasing managers’ index fell to 55.2 in May from 56.1 in April, the National Bureau of Statistics and China Federation of Logistics and Purchasing said in a statement yesterday in Beijing. That’s the lowest reading since March 2011 when the federation started seasonally adjusting the data. A reading above 50 indicates expansion.

Slowdown Spreading

“The data reinforce the message that the slowdown has spread from the manufacturing sector to the services sector,” said Tim Condon, chief Asia economist at ING Financial Markets in Singapore. “The current slowdown is more complicated to read than the 2008 global financial crisis and is stressing the authorities’ vaunted fine-tuning skills.”

Service industries now account for 43 percent of the economy, the federation said in yesterday’s statement. The manufacturing PMI compiled by the statistics bureau and logistics federation expanded at the slowest pace since December, according to a June 1 report.

JPMorgan cut China’s 2012 growth forecast to 7.7 percent from its previous estimate of 8 percent, citing increasing downside risks in the euro area. This comes after it cut the estimate to 8 percent from 8.2 percent in a May 2011 note.

German Chancellor Angela Merkel meets fellow coalition leaders today after opposing joint debt sharing in the euro area. Europe is China’s biggest export market, making up about 18 percent of the nation’s overseas shipments, according to Shenyin & Wanguo Securities Co.

ETF Declines

China may cut gas and diesel prices by about 700 yuan per ton, the Shanghai Securities News said, citing industry website Chem99.com.

Chinese equities traded in New York fell the most in six months on June 1, as SouFun Holdings Ltd. sank to a one-week low after data indicated housing prices fell and manufacturing slowed in the world’s second-largest economy.

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., tumbled 2.4 percent to $32.69, following a 12 percent decline in May. The Standard & Poor’s 500 Index of U.S. shares slumped 2.5 percent to 1,278.04 as U.S. employers in May added the fewest workers in a year.

Payrolls climbed by 69,000 last month, less than the most- pessimistic forecast in a Bloomberg News survey, after a revised 77,000 gain in April that was smaller than initially estimated, Labor Department figures showed yesterday in Washington. The median projection called for a 150,000 May advance. The jobless rate rose to 8.2 percent from 8.1 percent.

Housing Prices

SouFun, owner of China’s biggest real estate website, lost 5.3 percent to $14.94 in New York trading on June 1, the lowest since May 25, after sinking as much as 10 percent. American depositary receipts of Shanghai-based E-House China Holdings Ltd. decreased 5.7 percent to $5.14, extending their three-day loss to 16 percent.

China’s home prices declined 0.3 percent from April to 8,684 yuan ($1,363) per square meter (10.76 square feet), Beijing-based SouFun said in an e-mailed statement June 1, based on its survey of 100 cities in the country. That’s the lowest since January 2011 and the ninth month-on-month drop, the longest stretch since it started compiling the data in July 2010.

China’s stocks “are two to four weeks away from the bottom before a significant rebound,” Michael Shaoul, chairman of Marketfield Asset Management in New York, which oversees more than $1.6 billion, said by phone June 1. “There is strong evidence the Chinese domestic economy is decelerating. There’s a race between data in China and government action.”

-- Editors: Allen Wan, Richard Frost

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net