China's Stocks Fall Most in 2 Weeks, Led by Ping An Insurance

By Chua Kong Ho

July 15 (Bloomberg) -- China's stocks fell the most in two weeks, led by Ping An Insurance (Group) Co. on concern that global credit-market losses will curb growth and dent profits.

Ping An, China's second-biggest insurer, and Shanghai Pudong Development Bank Co., part-owned by Citigroup Inc., led declines. Poly Real Estate Group Co. was among developers that plunged the maximum 10 percent. The U.S. government's plan to provide central bank money to rescue Fannie Mae and Freddie Mac, which buy or finance almost half of the $12 trillion of U.S. mortgages, failed to stem a plunge in financial stocks.

``Freddie and Fannie are basically quasi-sovereigns and many Asian governments and banks hold their debt,'' said Leslie Phang, the Singapore-based head of investments at the private- clients unit of Schroders Plc, which oversees about $260 billion globally. ``Nobody expected them to blow up and it's shaken the foundations.''

The CSI 300 Index, which tracks stocks on both the Shanghai and Shenzhen exchanges, lost 122.90, of 4.1 percent, to 2,852.98 at the 3 p.m. local time close, the most since June 27. All 10 industry groups declined, with financial shares contributing the most to the retreat. Stocks also slipped on speculation that China's economy slowed for a fourth-straight quarter.

Unlimited Stakes

Fannie Mae and Freddie Mac lost about half of their market value last week on concern about their ability to refinance debt. U.S. Treasury Secretary Henry Paulson has asked Congress for authority to buy unlimited stakes in the two companies and to provide loans to them.

Taiwan's Cathay Financial Holding Co. said it held more than $6 billion in debt issued by the two U.S. companies and the Nikkei reported the three-largest Japanese banks held $44 billion. U.S. financial stocks slumped yesterday after initially rallying on the Treasury Department's bailout plan.

Ping An lost 6 percent to 40.61 yuan, while rival China Life Insurance Co. also dropped 6 percent to 23.81 yuan. Shanghai Pudong declined 7.1 percent to 21.83 yuan.

Industrial & Commercial Bank of China Ltd., the country's largest, retreated 3.4 percent to 4.88 yuan. China Construction Bank Corp. declined 4.1 percent, while Bank of China Ltd. slid 3.1 percent.

Poly Real Estate Group, China's second-largest developer by market value, slumped to 15.12. COFCO Property (Group) Co. slid the maximum 10 percent to 11.22 yuan, as did Gemdale Corp., to 8.98 yuan.

China's Economy

China's economy grew 10.3 percent in the second quarter from a year earlier, according to the median estimate in a Bloomberg News survey of economists, after expanding 10.6 percent in the prior three months. The official announcement is due on July 17 in Beijing.

Citic Securities Co., the nation's biggest brokerage, dropped 5.9 percent to 23.03 yuan, after its competitor Guoyuan Securities Co. joined Hong Yuan Securities Co. in posting a plunge in first-half profit. Beijing-based Guoyuan slumped 6.5 percent to 16.53 yuan.

The benchmark CSI 300 Index has slumped 51 percent from its Oct. 16 record. The value of securities transactions in June was 62 percent lower compared to a year earlier. A measure of financial stocks contributed to more than half of the index's decline today.

The Shanghai Composite Index, a measure of shares traded in the city, lost 3.4 percent to 2,779.45. The Shenzhen Composite Index dropped 3.2 percent.

The following shares also rose or fell in China. Stock symbols are in parentheses after company names.

Chongqing Iron & Steel Co. (601005 CH), a steelmaker, gained 3.3 percent to 5.59 yuan, after saying first-half profit will rise more than 60 percent.

Shandong Gold Mining Co. (600547 CH), the third-largest Chinese bullion producer, added 2 percent to 65.59 yuan. First- half profit probably jumped more than fivefold because of higher output and lower costs, it said.

To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at Kchua6@bloomberg.net