China’s Stocks Fall for a Third Day Led by PetroChina, Ping An

By John Liu

April 28 (Bloomberg) -- China’s stocks fell for a third day, after PetroChina Co. and other companies posted lower profits, raising concerns the government’s stimulus may not be enough to boost corporate earnings amid the outbreak of swine flu.

PetroChina, the nation’s biggest oil company, and Ping An Insurance (Group) Co., China’s second-largest insurer, dropped at least 2 percent after posting decreases in first-quarter profit. Air China Ltd., the nation’s largest international carrier, slid 2.4 percent on concern the spread of swine flu will slow travel demand.

“The results have raised concerns whether earnings improvement can materialize in the coming quarters as expected,” said Zheng Tuo, a Shanghai-based fund manager at Bank of Communications Schroders Fund Management Co., which oversees the equivalent of about $6.5 billion.

The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, fell 13.49, or 0.6 percent, to 2,391.86 as of 1:19 p.m. local time. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, declined 0.2 percent to 2,507.52.

The World Health Organization raised its global alert of swine flu, saying the disease is no longer containable. Swine flu cases in the U.S. doubled to 40, and Mexico’s toll of flu- related deaths reached 149. It has spread to Canada, Spain and the U.K.

Paring Gains

The decline pared the Shanghai Composite’s gain this year to 31 percent, still the second-best performer among 89 global stock gauges tracked by Bloomberg. The measure advanced 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.

PetroChina lost 2.1 percent to 11.47 yuan. The nation’s biggest oil company said first-quarter net income declined 35 percent to 18.96 billion yuan. That’s worse than a median estimate of 19.5 billion yuan in a Bloomberg survey of three analysts.

Ping An slid 3.7 percent to 37.53 yuan. The insurer said first-quarter profit dropped 72 percent from a year earlier to 1.99 billion yuan as expenses climbed and the nation’s interest rate cuts eroded returns on bond holdings.

Angang Steel Co., China’s second-largest steelmaker by market value, fell 3.7 percent to 8.19 yuan. The company said first-quarter profit dropped 99.7 percent to 8 million yuan because slowing global demand pushed down prices while costs rose on high raw material prices.

Lower Profits

Chinese listed companies posted a combined profit of 66.6 billion yuan in the first quarter, a decline of 26 percent from a year earlier, the China Securities Journal reported, citing data from Wind. The data was for the 1,000 companies that had reported first-quarter results as of April 27.

Air China dropped 2.4 percent to 6.12 yuan. China Eastern Airlines Corp., the nation’s third-largest carrier by fleet size, lost 4.4 percent to 4.58 yuan, after declining 3.4 percent yesterday. China Southern Airlines Co., the nation’s biggest carrier by fleet size, slid 6.5 percent to 5.29 yuan. It slumped 8.7 percent yesterday. The company said first-quarter profit fell 71 percent to 222 million yuan as currency fluctuations offset gains from higher traffic.

“Swine flu now poses a big threat to the economic recovery,” said Liu Xiangning, a strategist at United Securities Co. in Shenzhen. “Unless it’s contained, global trade and economic growth will be jeopardized, and that’s not good for equities.”

To contact the reporter on this story: John Liu in Shanghai at jliu42@bloomberg.net