By Zhang Shidong
March 25 (Bloomberg) -- China’s stocks fell, snapping a seven-day rally, as a measure of shipping costs for commodities extended its longest losing stretch since December and Bank of China Ltd. reported its weakest earnings growth in three years.
China Shipping Development Co. and China Cosco Holdings Co. dropped more than 4 percent as lower rates may damp earnings. Bank of China, the country’s third-largest, lost 2.3 percent. Kweichow Moutai Co., the biggest liquor maker, retreated 3.9 percent after 2008 profit missed some analysts’ estimates.
“The first-quarter earnings will still be ugly and we won’t see an immediate recovery of quarterly earnings going forward,” said Zhang Ling, a fund manager at ICBC Credit Suisse Asset Management Co. in Beijing, which oversees the equivalent of $7.21 billion.
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, lost 46.87, or 2 percent, to 2,291.56 at the close, ending a 9.8 percent gain in the past seven days. The CSI 300 Index, measuring the Shanghai and Shenzhen exchanges, dropped 2.1 percent to 2,401.33.
The decline pared the Shanghai Composite’s gain this year to 26 percent, which still makes it the best performer among 89 benchmark measures tracked worldwide by Bloomberg. The gauge is set for its best first-quarter performance in nine years.
Stocks have rallied on optimism the government’s 4 trillion yuan ($585 billion) stimulus package will reverse a slump in the world’s third-largest economy, after fourth-quarter growth slowed to the weakest pace in seven years.
‘Some Recovery’
China’s economy will recover strongly in the second and third quarters as the stimulus plan takes effect, central-bank adviser Fan Gang said at a conference in Hong Kong today, adding that the economy has “already seen some recovery.”
China Shipping, the nation’s biggest oil carrier, dropped 5 percent to 10.98 yuan. China Cosco, the world’s largest operator of dry-bulk ships, fell 4.9 percent to 11.16 yuan. Cosco Shipping Co., a unit of China’s biggest shipping company, lost 3.5 percent to 9.51 yuan.
The Baltic Dry Index yesterday dropped 0.9 percent to 1,758 points, the Baltic Exchange said. The gauge has fallen for 10 straight days, its longest run of losses since the 13 trading sessions to Dec. 5.
Bank of China dropped 2.3 percent to 3.39 yuan. Net income for the world’s third-biggest bank by market value rose 14 percent from a year earlier to 63.36 billion yuan, it said yesterday. That fell short of the average 67.5 billion yuan estimate among 26 analysts surveyed by Bloomberg.
‘Aren’t as Good’
The growth is the slowest pace in three years on writedowns of U.S. mortgage investments and a contraction in loan profitability.
“Bank of China’s earnings are disappointing and below the market’s estimate,” said Zhang Xiuqi, a strategist at Guotai Junan Securities Co. in Shanghai. “That’s probably an indication that overall earnings for Chinese banks in 2008 aren’t as good as previously expected.”
Other banks also fell. Industrial & Commercial Bank of China Ltd., the nation’s biggest listed lender, slid 1.6 percent to 3.77 yuan. China Construction Bank Corp., the No. 2, lost 1.9 percent to 4.20 yuan.
Moutai lost 3.9 percent to 114.20 yuan. Net income rose 34 percent to 3.8 billion yuan after it raised prices and output.
“We believe demand for premium spirits, with a more discretionary spending nature, will see more negative impact from the macro slowdown than other consumer staples,” Goldman Sachs Group Inc. analysts Yifan Deng and Joey Zeng wrote in a report today. Moutai’s 2008 earnings were 14 percent lower than Goldman Sachs estimates, the report said.
Gold producers fell after the precious metal had the biggest decline in a week on concern an economic revival will reduce its appeal.
Zhongjin Gold Corp., the country’s second-largest by market value, dropped 1.5 percent to 58.51 yuan. Shandong Gold Mining Co., the third largest, fell 1.3 percent to 79.41 yuan.
Gold futures for April delivery declined 3 percent to $923.80 an ounce in New York, the biggest drop for a most-active contract since March 18.
To contact the reporter on this story: Zhang Shidong in Shanghai at szhang5@bloomberg.net
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