By Bloomberg News
Sept. 21 (Bloomberg) -- China’s stocks fell for a second day, led by commodity producers and financial companies, as metals prices declined and investors speculated new share sales will draw funds away from existing equities.
Jiangxi Copper Co. and Baoshan Iron & Steel Co., the country’s biggest producers of copper and steel, lost more than 3 percent. Shanghai Pudong Development Bank Co., the Chinese partner of Citigroup Inc., retreated 4.7 percent after receiving regulatory approval to sell new shares. Metallurgical Corp. of China Ltd. jumped 27 percent on its first day of trading, less than half this year’s average debut gain.
The Shanghai Composite Index fell 49.18, or 1.7 percent, to 2,913.49 as of 1:16 p.m., extending a 3.2 percent decline on Sept. 18. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, slipped 1.9 percent to 3,138.93.
“The market is worried there will be a new wave of fundraising,” said Zhang Ling, who helps oversee about $7.21 billion at ICBC Credit Suisse Asset Management Co. in Beijing. “In the absence of any new information showing the nation’s economic recovery is solid, some investors are choosing to play it safe and selling.”
The world’s third-largest economy faces an “arduous task” in maintaining steady growth and a stable society, President Hu Jintao said yesterday.
China’s securities regulator over the weekend approved six companies for listing on the nation’s Nasdaq-like board for start-ups in Shenzhen, bringing the total number to 13. The board will probably raise about 20 billion yuan ($2.9 billion) this year, with trading beginning by the end of October, the Hong Kong Economic Journal reported today, citing Shenyin & Wanguo Securities.
Share Sales
Jiangxi Copper fell 3.2 percent to 37.88 yuan. Baoshan Steel slumped 3.7 percent to 6.82 yuan. Zijin Mining Group Co., China’s largest gold producer, slid 4 percent to 9.25 yuan.
Copper declined 3.8 percent, the most since Aug. 31, and gold dropped 0.3 percent. The price for hot-rolled steel sheet in China fell 0.4 percent to a four-month low, according to data from Beijing Antaike Information Development Co.
Shipping lines retreated on lower transport rates. China Cosco Holdings Co., the world’s largest operator of dry-bulk ships, fell 3 percent to 13.39 yuan. China Shipping Development Co., a unit of China’s second-biggest sea-cargo group, dropped 3.2 percent to 12.54 yuan.
The Baltic Dry Index slid 1.4 percent on Sept. 18, declining for a sixth session, according to the Baltic Exchange. The gauge lost 4.5 percent for the week.
Share Sale
Pudong Bank retreated 4.7 percent to 19.48 yuan after saying it has received regulatory approval to sell 1.14 billion new shares through a private placement. Pudong Bank said earlier it will raise no more than 15 billion yuan ($2.2 billion) from the private placement.
China Construction Bank Corp., the country’s second largest, fell 1.7 percent to 5.69 yuan. Industrial Bank Co., part-owned by a unit of HSBC Holdings Plc, slipped 2.9 percent to 32.94 yuan, paring its gain this month to 18 percent.
The two-day loss by the Shanghai Composite narrowed its advance this month to 9.1 percent. Equities rebounded in September from a 22 percent slump in August after the government signaled it won’t curb lending and data showed the country’s economic recovery is gathering pace. The index is up 60 percent this year.
Metallurgical Corp., the construction company that helped build the “Bird’s Nest” Olympic stadium in Beijing, jumped 27 percent to 6.86 yuan after raising 18.97 billion yuan ($2.8 billion) in the country’s second-biggest initial public offering this year.
Capital Raising
The gain compares with the average 68 percent first-day advance of the 22 other companies that debuted in China this year. Chinese companies have raised 96.1 billion yuan in yuan- denominated IPOs since a nine-month moratorium on domestic share sales ended in June.
“The pace of new share sales looks a bit fast now,” said Chen Wenzhao, a strategist at China Merchants Securities Co. in Shanghai. “That will have a negative impact at a time when the market is very sensitive to liquidity.”
China Yangtze Power Co. and other hydro-electric power producers rose after the China Securities Journal reported the government may increase the companies’ energy prices.
Yangtze Power, owner of the world’s biggest hydropower project, gained 2.6 percent to 13.79 yuan. Chongqing Three Gorges Water Conservancy and Electric Power Co. climbed 7.8 percent to 8.39 yuan.
The country will implement a plan “when appropriate” to make hydro-power prices match the cost of coal-fired electricity, Zhang Guobao, the head of the National Energy Administration, was quoted by the newspaper as saying.
--Zhang Shidong. Editors: Richard Frost, Linus Chua
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at +86-21-6104-7014 or szhang5@bloomberg.net
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