China’s Stocks Retreat as Exports Fall; Railway Erju Declines

By Zhang Shidong

Dec. 11 (Bloomberg) -- China’s benchmark stock index fell after exports dropped for the first time in seven years and inflation slowed, adding to evidence of weakening growth in the world’s fourth-largest economy.

China Railway Erju Co., a unit of China Railway Group Ltd., slid 6.6 percent and Shanghai Pudong Development Bank Co., the Chinese partner of Citigroup Inc., lost 3.7 percent on concern business is slowing. Baoshan Iron & Steel Co., China’s biggest steelmaker, fell 3.7 percent after a report showed steel-product exports decreased 36 percent in November from a month earlier.

“Some economic data, particularly the export numbers, are worse than expected and have put pressure on the market,” said Xu Lirong, a fund manager at Franklin Templeton Sealand Fund Management in Shanghai, which manages the equivalent of $2.56 billion.

The CSI 300 Index, which tracks yuan-denominated A shares listed on China’s two exchanges, declined 50.06, or 2.4 percent, to 2,046.34 at the close. About eight stocks fell for each that rose on the 300-member gauge, which swung between gains and losses about five times.

China Eastern Airlines Corp. and China Southern Airlines Co. jumped by the 10 percent limit as trading resumed after a halt while the carriers secured government bailout funds. Zhongjin Gold Corp. and Shandong Gold Mining Co. gained more than 4 percent after bullion prices rose the most in two weeks.

CSI 300

The CSI 300 has advanced 26 percent since reaching a two- year low on Nov. 4 as the Chinese government pledged to implement a 4 trillion yuan ($583 billion) economic stimulus package and the benchmark lending rate was cut by the most in 11 years. The gauge has lost 62 percent this year as third-quarter output growth eased to 9 percent, the slowest pace in five years.

China Railway Erju lost 6.6 percent to 9.19 yuan. Pudong Bank fell 3.7 percent to 14.86 yuan. Changsha Zoomlion Heavy Industry Science & Technology Development Co., the country’s second-biggest maker of concrete-handling machinery, retreated 7.2 percent to 13.69 yuan. Anhui Heli Co., a manufacturer of trucks and construction machinery, dropped 6.7 percent to 8.16 yuan.

Exports declined 2.2 percent in November from a year earlier, the customs bureau said in a statement yesterday after the market closed.

Consumer Prices

Consumer prices rose 2.4 percent in November from a year earlier, the statistics bureau said today. That was less than the 3.3 percent median estimate of 18 economists surveyed by Bloomberg News.

The government warned yesterday evening of “increasing downward pressure on the economy” and pledged to boost spending, cut taxes and do more to create jobs to maintain social stability. The central bank cut the one-year lending rate to 5.58 percent from 7.47 percent in September and dropped quotas limiting lending by banks.

Baoshan Steel fell 3.7 percent to 5.41 yuan. Angang Steel Co., China’s second-largest steelmaker by market value, dropped 3.6 percent to 7.85 yuan. Wuhan Iron & Steel Co., the third- largest, retreated 5.6 percent to 6.12 yuan.

China exported 2.95 million metric tons of steel products last month, the country’s customs said yesterday. The exports were 28 percent less than a year ago, according to Bloomberg data.

Government Bailout

China Eastern jumped 10 percent to 3.66 yuan and China Southern surged 10 percent to 4.32 yuan. Both stocks had been suspended from trading through yesterday since Nov. 26. China Eastern secured 3 billion yuan from the government bailout while China Southern received 2.3 billion yuan, the airlines said in separate statements yesterday.

Zhongjin Gold, the country’s second-largest by market value, climbed 4.4 percent to 35.76 yuan. Shandong Gold, the third- largest, rose 6.1 percent to 46.95 yuan. Zijin Mining Group Co., the largest, gained 1.5 percent to 4.80 yuan.

Gold futures for February delivery rose 4.5 percent to $808.80 an ounce in New York yesterday, the biggest gain since Nov. 21, on speculation a weaker dollar and higher commodity costs will boost demand for the metal as a hedge against inflation. The price is up 7.5 percent this week.

The following companies are among the most active in China’s markets. Stock symbols are in brackets after companies’ names.

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, dropped 2.3 percent to 2,031.68. The Shenzhen Composite Index fell 2.5 percent to 608.80.

Automakers: China’s vehicle sales fell 15 percent to 685,100 vehicles last month, the China Association of Automobile Manufacturers said in a statement today.

SAIC Motor Co. (600104 CH), China’s largest carmaker, slid 0.14 yuan, or 2.2 percent, to 6.36. Dongfeng Automobile Co. (600006 CH), which makes light trucks in China with Nissan Motor Co., lost 0.10 yuan, or 3.1 percent, to 3.11. FAW Car Co. (000800 CH), a Chinese partner of Mazda Motor Corp., retreated 0.09 yuan, or 1.2 percent, to 7.61.

Port operators: China’s port traffic grew at the slowest pace in 10 years in November as the global economic recession curbed trade of consumer goods and commodities, the official Xinhua News Agency said, citing the Ministry of Commerce.

Shenzhen Chiwan Wharf Holdings Ltd. (000022 CH), which operates the southern Chinese port of Chiwan, dropped 0.40 yuan, or 3.5 percent, to 10.99. China Cosco Holdings Co. (601919 CH), the country’s largest container line, lost 0.44 yuan, or 4.2 percent, to 10.01.

Bank of China Ltd. (601988 CH), the country’s third-largest, fell 0.09 yuan, or 2.7 percent, to 3.25. The Chinese bank may have to delay a planned $342 million investment in La Compagnie Financiere Edmond De Rothschild as China’s banking regulator withholds approval, three people familiar with the matter said.

PetroChina Co. (601857 CH), the nation’s biggest oil company, fell 0.17 yuan, or 1.5 percent, to 11.42. Parent China National Petroleum Corp. may post a full-year refining loss of more than 80 billion yuan because of higher crude costs, the Communist Party’s newspaper People’s Daily reported.

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