“Economic figures for May will continue to be bad,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “The economy is still on a slowing trajectory and the market is very cautious about buying.”
The Shanghai Composite Index (SHCOMP) dropped 0.5 percent to 2,321.14 as of 9:52 a.m. local time, poised for the lowest close since April 11. The CSI 300 Index (SHSZ300) declined 0.5 percent to 2,559.45. The Bloomberg China-US 55 Index (CH55BN), the measure of the most-traded U.S.-listed Chinese companies, retreated 0.8 percent in New York.
The Shanghai index lost 0.5 percent last week, a third week of declines, after a survey by HSBC Holdings Plc and Markit Economics signaled manufacturing may shrink for a seventh month in May. The stock gauge has fallen 3 percent this month on concern the slowdown in the world’s second-largest economy is deepening. The measure trades for 10 times estimated profit, compared with the MSCI Emerging Markets Index’s multiple of 9.7.
‘Fine Tuning’
Industrial companies’ profits declined 2.2 percent from a year earlier in April, the National Bureau of Statistics said on its website yesterday. That compared with a 4.5 percent gain in March. China’s State Council said on May 23 that downside risks to growth are increasing and the government will intensify “fine-tuning” policies as needed, signaling it may take more aggressive steps to support the nation’s expansion.
China Coal Energy, the nation’s second-largest coal producer, fell 1.5 percent to 8.99 yuan. China Shenhua Energy Co., the biggest coal producer, dropped 0.3 percent to 25.91 yuan. Jiangxi Copper, China’s biggest producer of the metal, slid 1.7 percent to 25.05 yuan.
The government should speed up important infrastructure projects in impoverished areas and improve health-care services, the Xinhua News Agency reported yesterday, citing Premier Wen Jiabao during a trip to Hunan province’s remote mountainous areas.
About 7.4 billion shares changed hands in the Shanghai Composite on May 25, 18 percent lower than the daily average this year. Thirty-day volatility in the gauge was at 14.33, the lowest in a year.
Rising Inventories
Gemdale, China’s fourth-largest property developer, lost 0.8 percent to 6.66 yuan. Financial Street Holding Co. (000402) sank 0.8 percent to 6.64 yuan. Hangzhou Binjiang Real Estate Group Co. slipped 0.6 percent to 8.98 yuan.
New home inventory topped 10 million square meters in Shanghai as of May 27, the Oriental Morning Post reported today, citing online real-estate data. It may take 14.4 months to digest current inventory, a period that is close to a record, the paper said, citing Yang Chenqing, a China Real Estate Information unit analyst.
American depositary receipts on Suntech Power Holdings Co., the world’s biggest solar-panel maker, fell to a seven-month low on May 25 after HSBC Holdings Plc reduced (STP) its price estimate on the shares and Nomura Holdings Inc. reiterated a sell recommendation on the ADRs.
China ETF Slumps
Suntech reported last week a net loss of $133 million for the first three months of 2012, one of the three solar makers to report worse-than-estimated results among Chinese companies traded in New York, according to data compiled by Bloomberg. Earnings are falling at a time Europe is cutting solar energy subsidies as the region’s debt crisis lingers and the U.S. is imposing tariffs on Chinese solar-product imports.
The iShares FTSE China 25 Index Fund (FXI) (FXI), the biggest Chinese exchange-traded fund in the U.S., slipped 0.5 percent to $32.58, extending last week’s loss (FXI) to 1.3 percent.
The U.S. imposed tariffs of 31 percent to 250 percent on Chinese solar-product imports, the Commerce Department announced on May 17. Suntech was told to pay 31.22 percent.
Yingli Green Energy Holding Co., the sixth-largest silicon- based solar module producer, will probably report a $32.8 million net loss in the first quarter on May 30, according to the average estimate of 12 analysts surveyed by Bloomberg. This compares with a $56.2 million net profit a year ago.
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