China Stocks Plunge to 18-Month Low; Gold, Energy Shares Drop

By Zhang Shidong

Aug. 18 (Bloomberg) -- China's stocks plunged, extending an 18-month low, on concern the government will avoid introducing measures to boost the world's worst-performing market this year.

Citic Securities Co., the nation's second-biggest brokerage by market value, fell to the lowest in 18 months after the securities regulator said China will seek to channel investment by pension funds, insurers and other large institutions into stocks, without giving details. Shanxi Lu'an Environmental Energy Development Co. and Shandong Gold Mining Co. led coal and metal companies lower on speculation the bear market in commodities will deepen.

``There is no confidence in the market,'' said Wu Kan, a fund manager in Shanghai at Dazhong Insurance Co., which oversees the equivalent of $285 million. ``Everyone is disappointed that the regulator hasn't done anything concrete to stem the decline.''

The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, declined 134.21, or 5.5 percent, to 2,313.40 at the close, the lowest since Feb. 5, 2007. The measure, which is at its cheapest in relation to earnings since March 2006, has tumbled 57 percent this year, the most among 88 global measures tracked by Bloomberg, on concern government measures to cool inflation will damp earnings.

China South Locomotive & Rolling Stock Corp., the nation's biggest maker of trains, surged on its Shanghai debut today.

To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net