By John Liu
April 27 (Bloomberg) -- China’s stocks fell, extending a weekly drop, as profit declines raised concern earnings have yet to benefit from the government’s stimulus spending, and as an outbreak of swine flu hit airlines and pig producers.
China Pacific Insurance (Group) Co., the nation’s third- largest insurer, and Bright Dairy & Food Co. retreated at least 6 percent after profit sank. Air China Ltd. slid 5.7 percent while Henan Shuanghui Investment & Development Co., a unit of China’s biggest food company, lost 5.8 percent as swine flu claimed as many as 81 lives in Mexico and the World Health Organization called the outbreak a “public health emergency of international concern.”
“The market lacks confidence in whether corporate earnings will recover as quickly as expected,” said Larry Wan, Shanghai- based deputy chief investment officer at KBC-Goldstate Fund Management Co., which oversees the equivalent of $583 million in assets. “It looks like swine flu is spreading, which has caused some panic among investors.”
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, fell 21.31, or 0.9 percent, to 2,427.28 as of 1:58 p.m. local time. The drop extended a 2.2 percent decline last week, the first weekly retreat in six weeks.
The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, lost 1.4 percent to 2,537.13.
The decline pared the Shanghai Composite’s gain this year to 32 percent, still the second-best performer among 89 global stock gauges tracked by Bloomberg. The measure gained earlier on optimism a 4 trillion yuan ($585 billion) stimulus package and record new loans will prevent a slump in the world’s third- largest economy.
Lower Earnings
China Pacific slid 6.8 percent to 16.76 yuan. The company said first-quarter net income dropped 89 percent from a year earlier to 200 million yuan. Bright Dairy, the country’s second- largest listed dairy-product maker, slumped 7.1 percent to 7.21 yuan after it said first-quarter profit declined 92 percent from a year earlier to 8.8 million yuan.
China State Shipbuilding Co., the country’s biggest shipbuilder, retreated 5.1 percent to 61.91 yuan. The company said first-quarter net income fell 36 percent from a year earlier to 623 million yuan. Yanzhou Coal Mining Co., the listed unit of China’s fourth-biggest coal miner, slid 5 percent to 13.71 yuan after saying profit dropped 49 percent in the first three months on lower product prices and sales.
‘Pressure the Market’
“These bad results will pressure the market in the short term,” said Chen Wenzhao, a strategist at China Merchants Securities Co. in Shanghai. “It still remains to be seen if profit will catch up with share price gains in the second quarter.”
China’s corporate profits fell 73 percent to 43.4 billion yuan in the fourth quarter from a year earlier, Haitong Securities Co. said on April 23, and the brokerage forecast further declines in the first half.
Air China dropped 5.7 percent to 6.30 yuan. China Southern Airlines Co., the nation’s biggest carrier by fleet size, fell 5.6 percent to 5.69 yuan.
Shuanghui slid 5.8 percent to 34.11 yuan, set for the biggest decline since Nov. 12. Sichuan Gaojin Food Co., a producer of pork products, slumped 7.1 percent to 8.95 yuan while Hunan New Wellful Co., a pig farming company, tumbled 9.4 percent to 7.26 yuan.
New swine flu cases also confirmed in Canada, and suspected in Brazil, Europe and New Zealand. In the U.S., 20 people have contracted the disease in five states, and the number is likely to expand, said Dr. Richard Besser, acting chief of the Centers for Disease Control and Prevention, at a White House briefing yesterday. While those instances were mild and no one died, the disease may become “more severe,” he said.
Animal vaccine makers including China Animal Husbandry Industry Co. advanced. China Animal Husbandry jumped the 10 percent daily limit to 21.45 yuan while Inner Mongolia Jinyu Group Co. also surged 10 percent to 10.21 yuan.
The following companies were among the most active in China’s markets. Stock symbols are in brackets after companies’ names.
Dongfang Electric Corp. (600875 CH), China’s second-biggest maker of power equipment, fell 2.8 percent to 40.65 yuan. The company said it will raise as much as 5 billion yuan via a share placement.
Shanghai International Port (Group) Co. (600018 CH), the operator of China’s busiest harbor, lost 2.2 percent to 5.27 yuan. Shanghai Port said first-quarter net income fell 28 percent from a year earlier to 734 million yuan.
To contact the reporter on this story: John Liu in Shanghai at jliu42@bloomberg.net
Posts
No comments:
Post a Comment