Economy
Second fall for stocks; investors bet against easing
Updated: 2011-08-18 08:13
By Zhang Shidong (China Daily)
SHANGHAI - Stocks on the Chinese mainland fell for a second day as investors speculated the central bank won't ease monetary policy, even as the economy slows and a meeting of European leaders failed to ease concerns about the region's debt crisis.
Jiangxi Copper Co and Zhuzhou Smelter Group Co, the producers of copper and refined zinc, paced a decline for metal producers on expectations slowing growth will sap demand for raw materials. China Shipping Development Co dropped after first-half profit fell 30 percent. China Minsheng Banking Corp rose to a one-month high after profit jumped 57 percent.
"The European debt problem cannot be solved in the near term and its negative effect on the stock market will linger," said Li Jun, a strategist at Central China Securities Co in Shanghai. "Corporate earnings are still strong and concern has receded that profit forecasts will be cut massively."
The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, retreated 0.26 percent to 2601.26, extending Tuesday's 0.7 percent decline. The CSI 300 Index slid 0.4 percent to 2886.01.
The Shanghai Composite has slid 7.4 percent this year as the People's Bank of China, the country's central bank, raised interest rates five times and ordered lenders to set aside more cash as deposit reserves 12 times since the start of 2010 to contain inflation that quickened to the fastest pace in three years last month.
Jiangxi Copper slid 1.1 percent to 32.97 yuan ($5.12). Zhuzhou Smelter retreated 1.4 percent to 15.23 yuan. Huludao Zinc Industry Co lost 1.5 percent to 6.46 yuan. German Chancellor Angela Merkel and French President Nicolas Sarkozy rejected selling euro bonds and expanding a 440-billion- euro ($633 billion) rescue fund after talks between the two on Tuesday in Paris.
Gross domestic product in the 17-nation eurozone expanded 0.2 percent in the second quarter from the previous three months, when the economy grew 0.8 percent, the European Union's statistics office in Luxembourg said in a statement on Tuesday.
That was the weakest growth rate since the euro region emerged from a recession in late 2009 and it was also less that the 0.3 percent median estimate of 34 economists in a Bloomberg News survey.
"It doesn't help that Merkel and Sarkozy are taking up air time with soft policy proposals," Todd Martin, Asia equity strategist at Societe Generale SA, said in a note to clients. He said Chinese and South Korean stocks are "too cheap" and equity market gains for the Association of Southeast Asian Nations may be close to ending.
The Shanghai gauge is valued at 11.9 times estimated earnings, matching a record low for the multiple set in January 2006.
China Shipping slipped 0.3 percent to 7.26 yuan after first-half profit fell 30 percent. The stock was cut to "neutral" at Shenyin & Wanguo Securities Co, which cited rising fuel prices and weakness in the oil shipping industry.
Bloomberg News
E-paper
Going with the flow
White-collar workers find a traditional exercise helps them with the frustrations of city life
The light touch
Long way to go
Outdoor success
Specials
Star journalist remembered
Friends, colleagues attended a memorial service to pay tribute to veteran reporter Li Xing in US.
Robots seen as employer-friendly
Robots are not new to industrial manufacturing. They have been in use since the 1960s.
A prosperous future
Wedding website hopes to lure chinese couples