By Zhang Shidong
Nov. 24 (Bloomberg) -- China’s stocks fell for a third day, led by airlines, after the nation’s largest international carrier said fuel hedging losses tripled. Developers retreated on speculation interest rates may stay unchanged.
Air China Ltd. fell 9.7 percent after disclosing higher losses on fuel-price bets. China Vanke Co., the nation’s biggest listed developer, slid 7.2 percent after central bank Deputy Governor Yi Gang told Hong Kong’s Phoenix Television interest rates are “relatively appropriate,” reducing the likelihood that borrowing costs will ease. China Merchants Property Development Co., a Shenzhen-based developer, slumped by the 10 percent daily limit after announcing plans to sell new shares.
“There’s some bad corporate news coming out and investors are very wary of share sales at this moment,” said Zhang Ling, who manages the equivalent of $1.1 billion at ICBC Credit Suisse Asset Management Co. in Beijing, declining to comment on his equities transactions.
The CSI 300 Index, which tracks yuan-denominated A shares listed on China’s two exchanges, declined 83.09, or 4.3 percent, to 1,837.64 at the close. Only fourteen stocks rose on the 300- member gauge, while all 10 industry groups retreated.
Suning Appliance Co., China’s biggest home appliance retailer by market value, rose 1.8 percent on the expectation it will benefit after a magazine report that the chairman of its biggest rival was detained.
Stimulus Gain
The CSI 300 has climbed 9.5 percent since the government announced on Nov. 9 a 4 trillion yuan ($590 billion) stimulus package that will boost spending on railways, low-rent housing and infrastructure in rural areas. The gauge remains 66 percent lower this year. President Hu Jintao said Nov. 21 waning overseas demand has “adversely affected” industrial production and company earnings.
Air China fell 9.7 percent to 3.91 yuan. The fair-value loss on contracts widened to 3.1 billion yuan as of Oct. 31, from 1 billion yuan disclosed in the third quarter, the carrier said in a statement on Nov. 21 after the market closed.
Jet-fuel prices plunged 62 percent from a peak on July 11, leaving airlines with contracts to buy fuel for more than market rates. Cathay Pacific Airways Ltd., Hong Kong’s biggest carrier, said hedging losses as of Oct. 31 are estimated to be HK$2.8 billion ($359 million).
China Southern Airlines Co., the nation’s biggest carrier by fleet size, lost 8.7 percent to 3.34 yuan. China Eastern Airlines Corp., the nation’s third-largest carrier by fleet size, slid 8.9 percent to 4 yuan.
Vanke retreated 7.2 percent to 6.42 yuan. Poly Real Estate Group Co., China’s second-largest developer by market value, slid 6.7 percent to 16.76 yuan. Gemdale Corp., a Chinese developer that partnered with ING Groep NV, declined 7.8 percent to 6.43 yuan.
Merchants Property
China’s central bank has slashed borrowing costs three times since September to bolster growth in the world’s fourth- largest economy. Output grew at the slowest pace in five years in the third quarter.
Merchants Property tumbled 10 percent to 13.75 yuan. The developer will sell as many as 450 million shares to be priced at 13.2 yuan each and plans to start selling the stock on Nov. 26, it said in a statement today. The funds will be used to help finance 14 commercial and residential projects, it said.
Suning Appliance gained 1.8 percent to 14.90 yuan. Huang Guangyu, chairman of Hong Kong-listed Gome Electrical Appliances Holdings Ltd., was detained and questioned by police over alleged “market manipulation,” Caijing magazine reported, citing unidentified people.
Gome “is making necessary inquiries for the purpose of verifying the allegations,” the company said in a statement today, adding that it hasn’t received any legal notice or document related to the matter from the Chinese government.
Possible Consolidation
“The Huang incident provides an opportunity for industry consolidation, which might benefit Suning’s development,” Huang Zhigang, a Shanghai-based analyst with Everbright Securities Co., wrote today in a note. “Suning may surpass Gome and acquire Gome for consolidation, should conditions permit.”
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, dropped 3.7 percent to 1,897.06. The Shenzhen Composite Index lost 3.6 percent to 532.82.
The following companies were among the most active in China’s markets. Stock symbols are in brackets after companies’ names.
Retailers: China’s top planning agency is drafting measures including salary increases and cuts in personal income taxes to boost consumption, the Economic Observer reported yesterday. The proposal may be put up for discussion at the government’s Central Economic Work Conference early next month, it said.
Beijing Wangfujing Department Store (Group) Co. (600859 CH) advanced 1.48 yuan, or 8.9 percent, to 18.16. Dashang Group Co. (600694 CH), the listed unit of China’s third-largest retailer, climbed 0.84 yuan, or 5 percent, to 17.56. Shanghai Yuyuan Tourist Mart Co. (600655 CH), a Chinese retailer of gold and jewelry, added 0.16 yuan, or 1.8 percent, to 9.28.
China Cosco Holdings Co. (601919 CH), the country’s largest container line, fell 0.38 yuan, or 4.4 percent, to 8.28. The company said it and three partners will cut capacity on Asia- Europe routes by 30 percent starting in early December as a European recession damps demand for Asian-made goods.
TCL Corp. (000100 CH), China’s biggest publicly traded consumer-electronics maker, retreated 0.26 yuan, or 9.1 percent, to 2.59. TCL said it won regulatory approval to sell new shares. TCL said in September that it plans to raise 1.39 billion yuan selling a minimum of 200 million shares.
Haitong Securities Co. (600837 CH), the country’s largest listed brokerage by market value, slid 1.20 yuan, or the 10 percent daily limit for a second day, to 10.78. About 1.29 billion shares in the company became tradable on Nov. 21, representing about 85 percent of the company’s publicly traded stock.
Shandong Nanshan Aluminum Co. (600219 CH), China’s second- largest aluminum products maker, lost 0.18 yuan, or 2.7 percent, to 6.40. The company was rated “hold” in initial coverage by GF Securities Co.
Shanghai Lujiazui Finance & Trade Zone Development Co. (600663 CH), a developer in Shanghai’s financial district, plunged 1.70 yuan, or the 10 percent limit, to 15.27 yuan, ending a three-day, 27 percent rally. Lujiazui doesn’t have any important event pending release, including any stake transfer, share sale or debt restructuring, it said in a statement to comply with an exchange rule requiring an explanation whenever shares rise more than 20 percent within three days.
To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net
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