Chinese Stocks Fluctuate; Power Producers Advance, Banks Decline

By Bloomberg News

China’s stocks swung between gains and losses as declines by banks countered gains by utilities.

Industrial Bank Co. (601166), part-owned by a unit of HSBC Holdings Plc, slid 3.9 percent, extending yesterday’s 10 percent plunge. Angang Steel Co. retreated to a four-month low after posting an annual loss. SAIC Motor Corp., China’s largest carmaker, retreated 3 percent after earnings trailed estimates. GD Power Development Co. (600795), the largest electricity producer in northeastern China, climbed 2.1 percent.

The Shanghai Composite Index (SHCOMP) added less than 0.1 percent to 2,236.76 as of 1:44 p.m. local time after changing direction at least seven times. The gauge has dropped 1.4 percent this year amid concern steps to cool property prices will drag on economic growth and as company earnings trailed estimates. The CSI 300 Index (SHSZ300) lost 0.3 percent to 2,492.69. Hong Kong markets are shut today for a holiday.

“Government measures such as property were harsher than expected, leading to a more pessimistic mood,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “Stocks will do better in the second quarter as the economic recovery is still on track and first-quarter earnings may improve.”

Trading volumes in the Shanghai Composite were 23 percent lower than the 30-day average for this time of day, according to data compiled by Bloomberg. Thirty-day volatility rose to the highest level in 13 months. The index is valued at 9.1 times projected 12-month earnings, the lowest level since December and less than the seven-year average of 15.8, the data show.

Banks Decline

The Shanghai index tumbled 2.8 percent to a three-month low yesterday as new restrictions on wealth-management products spurred concern that bank earnings will slow.

A gauge tracking financial companies dropped 0.6 percent today, the biggest contributor to declines on the CSI 300. Industrial Bank slumped 3.9 percent to 17.18 yuan, heading for the lowest level since Jan. 17. China Minsheng Banking Corp. (600016), the nation’s first privately owned bank, dropped 2.4 percent to 9.39 yuan.

The China Banking Regulatory Commission ordered medium and small-sized rural financial institutions to “strictly control” lending to local government financing vehicles, the China Securities Journal reported today, citing the regulator. Rural financial firms are required to cut back loans to LGFVs at county level or below, it said.

Corporate Earnings

Angang Steel lost 3.2 percent to 3.32 yuan. The steelmaker reported a loss of 4.16 billion yuan ($670 million) last year.

SAIC dropped 3 percent to 14.77 yuan. Net income increased 2.6 percent to 20.8 billion yuan in 2012, the automaker, which has joint ventures with GM and Volkswagen AG, said in a statement yesterday. That missed the 22 billion yuan average of nine analyst estimates compiled by Bloomberg.

Of 257 companies in the Shanghai Composite that have released full-year earnings results, 63 percent missed analysts’ estimates, according to data compiled by Bloomberg. Chinese listed companies are required to release annual and first- quarter reports by the end of April.

An index tracking utilities gained 0.8 percent. GD Power climbed 2.1 percent to 2.98 yuan.Huaneng Power International Inc. (600011), the listed unit of China’s largest power group, advanced 1.8 percent to 6.91 yuan.

China’s economic growth this year may be the same as last year’s 7.8 percent, the official Xinhua News Agency reported yesterday, citing Li Wei, head of the State Council’s Development Research Center.

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai atszhang5@bloomberg.net

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