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China’s Stocks Drop for Third Week on Global Recovery Concern
February 05, 2010, 02:24 AM EST
More From Businessweek
Feb. 5 (Bloomberg) -- China’s stocks fell, sending the benchmark index to its longest weekly losing streak since October, on concern faltering global economic growth will prevent the nation’s exports from sustaining a recovery.
Energy and metal stocks led the decline, with PetroChina Co. falling to the lowest since September and Jiangxi Copper Co., the nation’s biggest producer of copper, sliding 3.5 percent after commodity prices slumped the most since August. Bank of Communications Ltd., part-owned by HSBC Holdings Plc, lost 1.5 percent on a newspaper report that it may sell new shares.
“The global sell-off has added to more worries about the economic outlook, which has been plagued by tightening measures,” said Zhang Ling, who helps oversee about $7.21 billion at ICBC Credit Suisse Asset Management Co. “Even if exports slow down a bit, the government isn’t likely to relax the current tightening because that will make the issue of over- capacity even worse.”
The Shanghai Composite Index dropped 55.91, or 1.9 percent, to 2,939.40. The measure fell for a third week, losing 1.7 percent, the longest stretch since the three weeks ending Oct. 2. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, slid 2 percent to 3,153.09.
Chinese stocks joined a global rout in equities and commodities after U.S. initial applications for unemployment insurance increased to 480,000 last week and a disappointing Spanish bond auction fanned concern some nations will struggle with their budget deficits.
The MSCI World Index of 23 developed markets sank 2.9 percent and the Standard & Poor’s 500 Index fell 3.1 percent, the biggest declines since April 20.
‘Headwinds’
The nation’s stocks face “headwinds” from rising trade disputes with the U.S., Jim Oberweis, President of Oberweis Asset Management Inc., said yesterday in a Bloomberg Television interview.
“The two big concerns are trade wars that significantly affect China’s ability to export and a global recession that continues,” said Oberweis, Head of China Opportunities Fund.
President Barack Obama said Feb. 3 the U.S. would press China on the currency “to make sure that our goods are not artificially inflated in price and their goods” aren’t deflated. China and the U.S. have $409 billion in annual two-way trade and have swapped complaints about steel, poultry and tires as a global recession spurred countries to protect jobs. China’s exports jumped 17.7 percent in December, the first monthly growth since October 2008, according to the statistics bureau.
Yearly Decline
The Shanghai gauge has fallen 10 percent in 2010 on concern the government will raise interest rates and curb lending to cool the economy and avert asset bubbles.
China’s central bank ordered lenders on Jan. 12 to set aside larger reserves for the first time since June 2008, the most drastic step so far to cool the economy. The nation’s economic expansion accelerated to 10.7 percent in the fourth quarter, the fastest pace since 2007.
“The situation is a bit grim: the government is internally adopting tightening measures and externally the demand still looks fragile,” said Tu Hai, a strategist at Guoyuan Securities Co. in Shanghai. “The market may next reach a consensus that corporate earnings growth will be slower than previously expected.”
PetroChina lost 1.6 percent to 12.71 yuan, the lowest since Sept. 30. Jiangxi Copper plunged 3.5 percent to 33.42 yuan.
Zijin Mining Group Co., China’s largest gold producer, lost 2.4 percent to 8.29 yuan. Aluminum Corp. of China Ltd., the nation’s biggest maker of the lightweight metal and also called Chalco, retreated 3 percent to 12.15 yuan.
The Reuters-Jefferies CRB Index of 19 raw materials fell 2.6 percent to 263.67 in New York yesterday, the biggest drop since Aug. 14. Crude oil for March delivery tumbled 5 percent to $73.14 a barrel, the most since July 29.
February 05, 2010, 02:24 AM EST
More From Businessweek
Feb. 5 (Bloomberg) -- China’s stocks fell, sending the benchmark index to its longest weekly losing streak since October, on concern faltering global economic growth will prevent the nation’s exports from sustaining a recovery.
Energy and metal stocks led the decline, with PetroChina Co. falling to the lowest since September and Jiangxi Copper Co., the nation’s biggest producer of copper, sliding 3.5 percent after commodity prices slumped the most since August. Bank of Communications Ltd., part-owned by HSBC Holdings Plc, lost 1.5 percent on a newspaper report that it may sell new shares.
“The global sell-off has added to more worries about the economic outlook, which has been plagued by tightening measures,” said Zhang Ling, who helps oversee about $7.21 billion at ICBC Credit Suisse Asset Management Co. “Even if exports slow down a bit, the government isn’t likely to relax the current tightening because that will make the issue of over- capacity even worse.”
The Shanghai Composite Index dropped 55.91, or 1.9 percent, to 2,939.40. The measure fell for a third week, losing 1.7 percent, the longest stretch since the three weeks ending Oct. 2. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, slid 2 percent to 3,153.09.
Chinese stocks joined a global rout in equities and commodities after U.S. initial applications for unemployment insurance increased to 480,000 last week and a disappointing Spanish bond auction fanned concern some nations will struggle with their budget deficits.
The MSCI World Index of 23 developed markets sank 2.9 percent and the Standard & Poor’s 500 Index fell 3.1 percent, the biggest declines since April 20.
‘Headwinds’
The nation’s stocks face “headwinds” from rising trade disputes with the U.S., Jim Oberweis, President of Oberweis Asset Management Inc., said yesterday in a Bloomberg Television interview.
“The two big concerns are trade wars that significantly affect China’s ability to export and a global recession that continues,” said Oberweis, Head of China Opportunities Fund.
President Barack Obama said Feb. 3 the U.S. would press China on the currency “to make sure that our goods are not artificially inflated in price and their goods” aren’t deflated. China and the U.S. have $409 billion in annual two-way trade and have swapped complaints about steel, poultry and tires as a global recession spurred countries to protect jobs. China’s exports jumped 17.7 percent in December, the first monthly growth since October 2008, according to the statistics bureau.
Yearly Decline
The Shanghai gauge has fallen 10 percent in 2010 on concern the government will raise interest rates and curb lending to cool the economy and avert asset bubbles.
China’s central bank ordered lenders on Jan. 12 to set aside larger reserves for the first time since June 2008, the most drastic step so far to cool the economy. The nation’s economic expansion accelerated to 10.7 percent in the fourth quarter, the fastest pace since 2007.
“The situation is a bit grim: the government is internally adopting tightening measures and externally the demand still looks fragile,” said Tu Hai, a strategist at Guoyuan Securities Co. in Shanghai. “The market may next reach a consensus that corporate earnings growth will be slower than previously expected.”
PetroChina lost 1.6 percent to 12.71 yuan, the lowest since Sept. 30. Jiangxi Copper plunged 3.5 percent to 33.42 yuan.
Zijin Mining Group Co., China’s largest gold producer, lost 2.4 percent to 8.29 yuan. Aluminum Corp. of China Ltd., the nation’s biggest maker of the lightweight metal and also called Chalco, retreated 3 percent to 12.15 yuan.
The Reuters-Jefferies CRB Index of 19 raw materials fell 2.6 percent to 263.67 in New York yesterday, the biggest drop since Aug. 14. Crude oil for March delivery tumbled 5 percent to $73.14 a barrel, the most since July 29.
