HONG KONG: Most Chinese stocks fell after exports and imports grew less than estimated, boosting concern the nation's economic slowdown is deepening.
Jiangxi Copper Co. led declines for material stocks on demand concerns after government data showed China's exports rose 1 % in July, compared with economists estimate for 8 % growth. TCL Corp., the No. 1 publicly traded consumer- electronics maker, dropped for the first time in six days after reporting a decline in first-half net income. Kweichow Moutai Co. slid 4.9 % after the biggest baijiu liquor maker reported slower profit growth.
"The export figures show that it's hard to improve China's economy in the short term," said Cao Xuefeng, an analyst at Huaxi Securities Co. in Chengdu. "There are definitely expectations for more reserve-ratio requirement cuts and other measures to boost the economy, but I doubt they will be effective. There are limited tools the government can use."
The Shanghai Composite Index slipped 0.1 % to 2,171.42 at the 11:30 a.m. local-time break, as three stocks fell for every one that rose. The CSI 300 Index slid 0.3 % to 2,404.38. The Shanghai index has climbed 1.8 % this week, heading for a second week of gains, on speculation slowing economic growth and easing inflation will allow the government to loosen monetary policy and adopt more fiscal measures.
China's export growth was close to zero in July, raising the odds the government will take more-aggressive measures to support an economy the grew 7.6 % in the second quarter, the slowest pace since 2009.
Greater Pressure
The growth in July exports compared with 11.3 % in June, the customs bureau said. Imports rose 4.7 %, compared with the estimate for a 7 % gain and a 6.3 % increase in June. The trade surplus was $25.1 billion compared with $31.5 billion a year earlier The median projection for the trade surplus was $35.1 billion.
China faces greater pressure in the second half of the year in order to realize the country's 10 % trade growth target for this year, Vice Commerce Minister Gao Hucheng said at a briefing in Beijing.
Jiangxi Copper, the biggest producer of the metal, declined 1.1 % to 21.82 yuan. Yunnan Copper Industry Co. fell 0.9 % to 16.95 yuan.
Deutsche Bank AG, which lowered its growth forecast for the Chinese economy after yesterday's inflation and industrial output data, said it expects one interest-rate cut and two cuts in banks' reserve-ratio requirements for the rest of the year as well as "modest" tax cuts for small businesses.
Economic Data
The People's Bank of China has cut rates twice since early June and lowered lenders' reserve requirement ratios three times starting in November as part of the government's efforts to spur credit growth and support the economic expansion.
Government reports yesterday showed inflation cooled for a fourth month in July, while industrial output and retail sales grew less than estimated and producer prices plunged more than expected.
China will be more cautious about adjusting monetary policy as inflation may pick up again, according to a commentary on the front-page of the China Securities Journal today. The economy may face a larger money supply, rebounding home prices and declining interest rates in the future, leaving less room for government fine-tuning, according to the commentary, written by a reporter at the newspaper named Ni Mingya.
Both Deutsche Bank and Barclays Plc cut their growth forecasts for China's economy. Deutsche Bank lowered its 2012 growth estimate to 7.7 % from 7.9 % and its third- quarter forecast to 7.5 % from 7.9 %. Barclays reduced its 2012 China growth estimate to 7.9 % from 8.1 %.
Moutai Plunges
A gauge of consumer-staples producers fell 2.1 %, the most among the 10 industry groups in the CSI 300.
Moutai slid 4.9 % to 248.18 yuan, heading for the biggest drop since March 27. It said yesterday first-half net income climbed 43 % from a year earlier to 7 billion yuan. That compares with 58 % growth in last year's first half.
"Net income was below market expectations," said Liu Hui, analyst at CSC Securities HK Ltd. "The shares have risen this year. Investors also wanted to take profits."
TCL declined 1 % to 1.91 yuan. The company's first- half net income fell 48 % from a year earlier to 282.7 million yuan, according to a statement to the Shenzhen bourse.
Earnings Outlook
Huaxia Bank Co., partly owned by Deutsche Bank, gained 0.8 % to 9.10 yuan. Industrial Bank Co., part-owned by a unit of HSBC Holdings Plc, rose 1.2 % to 12.85 yuan. Industrial Bank's first-half net income rose 40 % to 17.1 billion yuan from a year earlier, while Huaxia Bank reported a 42 % jump to 6.08 billion yuan.
Chinese publicly traded companies are required to release first-half earnings results in July and August. Of the 886 companies in the Shanghai Composite, the 132 that reported second-quarter earnings had an average 1.4 % profit decline, according to data compiled by Bloomberg as of Aug. 8. Profit rose 2.8 % in the first quarter, the data showed.
The Bloomberg China-US 55 Index, the measure of the most- traded U.S.-listed Chinese companies, added 0.7 % yesterday in New York. The Hang Seng China Enterprises Index of Chinese companies traded in Hong Kong slid 0.4 % today.
"Chinese stocks are taking a breather after rising for five sessions," said Zhang Yanbin, an analyst with Zheshang Securities Co. in Shanghai. "Inflation has weakened so there are expectations the government has more scope to loosen monetary policy and there may be more reserve-requirement ratios cuts and the economy will stabilize." (Bloomberg/msw)
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