Chinese Stocks Pare Worst First-Quarter Decline in Three Years

By Bloomberg New

China’s stocks rose, paring the benchmark index’s worst first-quarter loss since 2010, as gains by utilities countered declines by health-care companies.

Huaneng Power International Inc. (600011) and GD Power Development Co. (600795) climbed at least 1.6 percent. China Resources Double-Crane Pharmaceutical Co. led losses by drugmakers. SAIC Motor Corp., China’s largest carmaker, retreated 2.8 percent after earnings trailed estimates.

The Shanghai Composite Index (SHCOMP) added less than 0.1 percent to 2,236.62 at the close. The gauge 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 lost 0.2 percent to 2,495.08. Markets in Hong Kong and much of Asia were 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 24 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.

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.

Utilities, Pharmaceuticals

An index tracking utilities gained 0.8 percent, the most among the CSI 300’s 10 industry groups. Huaneng Power, the listed unit of China’s largest power group, advanced 1.6 percent to 6.90yuan. GD Power, the largest electricity producer in northeastern China, climbed 1.7 percent to 2.97 yuan.

A measure of health-care stocks retreated 1.3 percent today, paring its gain to 22 percent this year. China Resources Double-Crane Pharmaceutical tumbled 5.6 percent to 24.53 yuan, trimming its advance to 8.1 percent this year. Shanghai Fosun Pharmaceutical (Group) Co. (600196) lost 3.8 percent to 12.10 yuan. Kangmei Pharmaceutical Co. dropped 3 percent to 17.54 yuan.

Corporate Earnings

SAIC dropped 2.8 percent to 14.80 yuan. Net income increased 2.6 percent to 20.8 billion yuan ($3.3 billion) 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. [bn:WBTKR=000898:CH]

Angang Steel Co. [] lost 3.5 percent to 3.31 yuan. The steelmaker reported a loss of 4.16 billion yuan last year.

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.

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.

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.

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

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