By John Liu
April 16 (Bloomberg) -- China’s key stock index fell for the first time in six days after growth in the world’s third- largest economy cooled to the slowest pace in almost a decade, raising concerns that companies may report lower earnings.
China Shenhua Energy Co. and China Coal Energy Co., the country’s top two coal producers, retreated at least 3 percent after the statistics bureau said the economy expanded 6.1 percent in the first quarter. Yunnan Copper Industry Co., China’s third-biggest producer of the metal, declined 0.6 percent after posting an annual loss last year.
“The GDP figures and corporate earnings have been disappointing,” said Zhang Ling, a fund manager at ICBC Credit Suisse Asset Management Co. in Beijing, which oversees the equivalent of $7.21 billion. “There are already some bubbles in the stock market.”
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, fell 1.92, or 0.1 percent, to 2,534.13 at the close after changing directions at least 15 times today. The CSI 300 Index, measuring the bourses in Shanghai and Shenzhen, added 0.12 point to 2,687.11.
China Cosco Holdings Co. and China Shipping Development Co. gained at least 1.4 percent after a measure of world trade rose to the highest in almost two weeks. China Southern Airlines Co., the nation’s biggest carrier by fleet size, slid 3.1 percent after Deutsche Bank AG and Morgan Stanley cut their recommendations on the stock.
‘Hard Earned’
China’s gross domestic product compares with the 6.2 percent median estimate of 13 economists surveyed by Bloomberg News. Industrial production and investment accelerated in March, according to the statistics bureau. The growth was “hard earned” in view of the global recession, Li Xiaochao, a spokesman for the bureau told a news briefing today.
Shenhua, the nation’s largest coal producer, lost 3.1 percent to 24.63 yuan. China Coal, the No. 2, fell 3.7 percent to 10.81 yuan after the company cut production by 4.6 percent in the first quarter. Datong Coal Industry Co., the third largest, retreated 3 percent to 26.12 yuan.
Yunnan Copper retreated 0.6 percent to 22.03 yuan. The company posted a 2008 loss of 2.79 billion yuan because of lower metal prices and the writedown of inventories.
“Corporate earnings are still disappointing and won’t improve as quickly as expected,” said Zhang Xiuqi, a strategist at Guotai Junan Securities Co. in Shanghai. “There may be more disappointments in first-quarter or first-half results.”
‘Looking for Recovery’
The Shanghai Composite climbed 8 percent over the past five days on speculation the government is considering additional stimulus measures to boost consumption and growth.
The measure’s 39 percent gain this year makes it the second-best performer among the 88 primary stock gauges tracked by Bloomberg globally. Stocks have rallied on optimism the government’s 4 trillion yuan ($585 billion) stimulus package and record new lending will spur a recovery in the world’s third- largest economy amid the global recession.
“The market is looking for recovery in the second half and in 2010,” Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co., said in a Bloomberg Television interview.
China’s stocks now reflect most of an anticipated recovery in the economy, said Lee King Fuei, a Hong Kong-based fund manager at Schroders Plc. Goldman Sachs Group Inc. ended its recommendation to be “long” on China stocks as the Shanghai Composite is close to the target of 2,600 set in December, the U.S. bank said in a report yesterday.
China Southern
China Southern, the nation’s biggest carrier by fleet size, slid 3.1 percent to 5.98 yuan. The stock rating was cut to “sell” from “buy” at Deutsche Bank, which cited risks from an uncertain Guangdong province economy and the carrier’s ability to contain costs.
Its recommendation was cut to “equal-weight” from “overweight” at Morgan Stanley, which said recent share-price gains have fully reflected a recovery in traffic growth, cuts in domestic jet fuel prices and capital injection.
China Cosco, the world’s largest operator of dry-bulk ships, added 2.5 percent to 13.47 yuan. China Shipping, the nation’s biggest oil carrier, advanced 1.5 percent to 14.58 yuan.
The Baltic Dry Index rose 2.8 percent to 1,534 points, according to the Baltic Exchange yesterday, the highest since April 2, on stronger demand for vessels that haul goods such as iron ore and coal.
Shanghai Chlor-Alkali Chemical Co., China’s biggest maker of caustic soda and polyvinyl-chloride, jumped the 10 percent daily limit to 5.79 yuan after China approved the trading of polyvinyl chloride futures on the Dalian Commodities Exchange.
To contact the reporter on this story: John Liu in Shanghai at jliu42@bloomberg.net
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