China's Stocks Retreat for Third Week; Shenzhen Bank Declines

By Zhang Shidong and Jiang Jianguo

Oct. 24 (Bloomberg) -- China's benchmark stock index fell for a third week, led by financial companies, on concern global financial turmoil may increase local losses on overseas transactions and slow corporate earnings growth.

Shenzhen Development Bank Co., controlled by buyout firm TPG Inc., slid 4.1 percent after profit growth slowed in the third quarter. China Merchants Bank Co., the nation's biggest dual-currency credit-card issuer, slumped by the 10 percent daily limit. The government will tighten monitoring of financial institutions' foreign currency holdings to prevent more losses, Shanghai Securities News reported today.

``We have sold bank shares on concern about earnings prospects,'' said Mo Fan, an analyst at Soochow Asset Management Co., which oversees 5 billion yuan ($731 million) in Shanghai. ``Further lending rate cuts will hurt their profitability on loans.''

The CSI 300 Index, which tracks yuan-denominated stocks traded in Shanghai and Shenzhen, slid 53.18, or 2.9 percent, to 1,781.60 at the close, the lowest since December 2006. It lost 2.8 percent this week, its third straight weekly decline.

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