Chinese stocks fell for a fifth day amid concern that a weakening property market will weigh on developers and consumer companies. The yuan was little changed after tumbling the most since 2010 yesterday.
The Shanghai Composite Index (SHCOMP) lost 0.6 percent to 2,022.48 at 1:50 p.m. local time, with declines in property and consumer stocks overshadowing gains in energy producers. The Chinese currency slipped 0.04 percent to 6.1288 per dollar, after tumbling 0.46 percent yesterday. Benchmark money-market rates fell to a seven-month low as central bank efforts to weaken the yuan boosted the supply of cash in the banking system.
The Shanghai Composite has led declines among global equity indexes during the past five days, dragging down its valuation to within 3 percent of an all-time low, as slower property-price gains spurred concern that consumers will curb housing-related purchases. Volatility in the yuan has increased amid speculation policy makers in the world’s second-largest economy are trying to discourage one-way bets on appreciation.
“Investors are afraid the property bubble may burst and stocks will tumble,” said Du Liang, an analyst at Shanxi Securities Co. in Beijing. “Still, I don’t think the central government will let the yuan depreciate much further so that will limit any drop.” The Shanghai Composite dropped to 10.2 times reported earnings yesterday, near its low of 10 times reached last month, according to data compiled by Bloomberg. The MSCI All-Country World Index has a multiple of 16.6. “We have fallen a lot so the negative news has been priced in,” said Zhang Gang, a strategist at Central China Securities in Shanghai. “Looking forward, we need to focus on the policy meeting in March as the leaders may give some direction on reforms,” he said, referring to the annual meeting of the National People’s Congress that begins March 5.
News Source: www.businessweek.com
“Investors are afraid the property bubble may burst and stocks will tumble,” said Du Liang, an analyst at Shanxi Securities Co. in Beijing. “Still, I don’t think the central government will let the yuan depreciate much further so that will limit any drop.” The Shanghai Composite dropped to 10.2 times reported earnings yesterday, near its low of 10 times reached last month, according to data compiled by Bloomberg. The MSCI All-Country World Index has a multiple of 16.6. “We have fallen a lot so the negative news has been priced in,” said Zhang Gang, a strategist at Central China Securities in Shanghai. “Looking forward, we need to focus on the policy meeting in March as the leaders may give some direction on reforms,” he said, referring to the annual meeting of the National People’s Congress that begins March 5.
News Source: www.businessweek.com