China Stocks Fall to Lowest Since 2009 as Growth Concerns Mount - Bloomberg

Chinese stocks fell, dragging the benchmark index to the lowest level since February 2009, on concern the economic slowdown is deepening.

Sany Heavy Industry Co. slumped 4.2 percent as the Securities Times reported China’s 2012 industrial output growth may slow. Angang Steel Co. retreated 2.6 percent, leading declines by material producers. China Vanke Co., the nation’s largest publicly traded property company, gained 1.6 percent after August sales increased from July.

The Shanghai Composite Index (SHCOMP) lost 0.4 percent to 2,034.89 at 10:05 a.m. in Shanghai, set for its lowest close since Feb. 2, 2009. The CSI 300 Index (SHSZ300) sank 0.5 percent to 2,193.20. The Hang Seng China Enterprises Index (HSCEI) of Chinese companies traded in Hong Kong retreated 1.4 percent. The Bloomberg China-US Equity Index (CH55BN) of the most-traded Chinese companies in the U.S. slumped 0.9 percent to 87.14 yesterday.

“Investors remain concerned about the economy and are worried macro data will be weak,” Zhang Gang, a strategist at Central China Securities Holdings Co., said by phone in Shanghai today. “They are hoping the government will come out with more stimulus measures to boost the economy.”

Signs that China’s economic slowdown is deepening have dragged the Shanghai Composite down 8.6 percent this quarter. The gauge sank 2.7 percent in August, a fourth straight month of declines. That’s the longest streak since the five months through August 2004, according to data compiled by Bloomberg.

A government purchasing managers index released last weekend showed China’s manufacturing shrank for the first time in nine months. Data showed yesterday that U.S. manufacturing shrank for a third month in August in the longest decline since the nation’s recession ended in 2009.

Tax Rebates

China’s 2012 industrial output growth may slow to about 10 percent, from 13.9 percent in 2011 and 15.7 percent in 2010, Securities Times reported today, citing a joint report by the Ministry of Industry and Information Technology and the Chinese Academy of Social Sciences. The manufacturing industry is facing weakening demand and production overcapacity, according to the report.

Sany Heavy slumped 4.2 percent to 8.90 yuan, poised for the lowest close since Sept. 21, 2010.

China may expand exporters’ tax rebates to help them cope with a slump in trade growth, according to three people with direct knowledge of the plan, deploying a stimulus tool used during the global credit crunch.

The government may give a full rebate of the 17 percent value-added tax on products including furniture, shoes and toys, up from the current range of 13 percent to 15 percent, said the people, who asked not to be identified because the discussions are private. The policy may be rolled out as soon as this month, depending on if trade remains weak, they said.

Lower Valuations

The Shanghai Composite trades at 9.3 times estimated profit, near the lowest level since January, according to weekly data compiled by Bloomberg. The measure’s 30-day volatility reading was at 11.9, compared with this year’s average of 17. About 5.7 billion shares changed hands in the gauge yesterday, about 27 percent lower than the daily average this year.

Commodity stocks dropped on concern slowing growth will hurt demand. Angang Steel retreated 2.6 percent to 3.35 yuan, headed for the lowest close since July 20, 2005. Yanzhou Coal Mining Co. (600188) retreated 1.2 percent to 17 yuan, poised for the lowest close since July 15, 2010. Jiangxi Copper Co. lost 0.5 percent to 19.78 yuan.

Commodity Producers

PetroChina, the nation’s largest oil producer, dropped 0.1 percent to 8.77 yuan. Oil futures for October delivery slipped 1.2 percent on the New York Mercantile Exchange, after the Institute for Supply Management’s U.S. factory index declined more than analysts forecast.

A gauge of property companies in the Shanghai Composite Index rose 0.5 percent, the only advance of five industry groups, after China Vanke posted August sales of 11.35 billion yuan, according to a statement to the Shenzhen Stock Exchange. Vanke had sales of 10.4 billion yuan in July, according to an Aug. 3 statement. The stock climbed 1.2 percent to 8.33 yuan.

The iShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., sank 1.8 percent yesterday, the steepest slump since July 23. American depositary receipts of Aluminum Corp. of China Ltd. also known as Chalco, lost 3.1 percent to $9.36, the lowest level since Nov. 20, 2008.

The Beijing-based company said Sept. 3 it dropped its C$925 million ($937 million) bid for Mongolian coal producer SouthGobi Resources Ltd. as it’s unlikely to win regulatory approval. Chalco’s plans to acquire a stake in SouthGobi have been hindered by the Mongolian government, which passed a law in May restricting foreign state-owned companies from controlling key assets.

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