China stocks fall most in two weeks as money-supply growth slows

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(Sept 10): China’s stocks fell, sending the benchmark index to its biggest loss in two weeks, after Premier Li Keqiang indicated money-supply growth slowed last month.

China Vanke Co. and Poly Real Estate Group Co. both slid 2.2 percent to lead declines for property developers. Apple Inc. suppliers Suzhou Anjie Technology Co. and Han’s Laser Technology Co. slumped at least 3.1 percent after the iPhone maker introduced new products. Ningbo Port Co. rose to a three-year high on speculation the government will set up more free-trade zones with neighboring countries.

The Shanghai Composite Index dropped 0.7 percent to 2,310.79 as of 1:12 p.m. M2, the government’s broadest measure, rose 12.8 percent, Premier Li said yesterday in Tianjin, the Xinhua News Agency reported ahead of the official release by the People’s Bank of China. That compares with a 13.5 percent pace in July, which was also the median estimate for August. The slowdown in money-supply expansion follows July’s plunge in new credit to the lowest level since 2008.

“Premier Li’s comments hinted that the economy isn’t in a good shape, while stressing that the government will focus on reforms rather than short-term stimulus,” said Wu Kan, a money manager at Shanghai-based Dragon Life Insurance Co. “That means a cut in reserve-requirement ratios or interest rates isn’t likely in the short term. That’s leading to a short-term correction.”

The CSI 300 Index declined 0.8 percent to 2,425.24. The Hang Seng China Enterprises Index lost 2.1 percent. The Bloomberg China-US Equity Index, the measure of the most-traded U.S.-listed Chinese companies, slid 1.1 percent yesterday. Trading volumes were 19 percent above the 30-day average for this time of day, according to data compiled by Bloomberg.

Apple Suppliers

A sub-index of property stocks in the Shanghai Composite retreated 1.1 percent, the most among the five industry groups. Vanke, the nation’s biggest listed property developer, slid for a second day. Poly Real Estate, the second largest, fell the most in a month. Gemdale Corp. slipped 0.9 percent.

Suzhou Anjie slid 3.1 percent while Han’s Laser tumbled 4.3 percent. Apple unveiled new products and services -- with a smartwatch, mobile-payments system, health applications and bigger-screen iPhones that all work together -- in the biggest new lineup so far under Chief Executive Officer Tim Cook. The stock dropped 0.4 percent in New York yesterday. Since 2008, Apple’s stock ended the day down five times on the days of presentations, averaging a loss of almost 2 percent.

Ningbo Port added 3.2 percent, heading for the highest close since July 2011. Small ports have been rallying on policy speculation such as a potential free-trade agreement with neighboring countries, reforms of the maritime industry and progress in Tianjin and Guangdong’s free-trade zones, according to a report by Jefferies Group LLC.

Stock Rebound

The State Council asked the commerce ministry to assist in free-trade zone framework planning for Tianjin and Guangdong after the two provincial-level governments submitted plans to the cabinet, the Shanghai Securities News reported today, citing unidentified people.

The Shanghai Composite has rebounded 16 percent since mid- March, spurred by speculation the Chinese government will reduce ownership of state-owned enterprises and a planned link between exchanges in Hong Kong and Shanghai will fuel inflows. It’s valued at 8.5 times 12-month projected earnings, the highest since December, according to data compiled by Bloomberg.

China’s stock rally will evaporate within weeks, Bank of America Corp.’s strategist David Cui said Sept. 8. Equities have been buoyed by government efforts to boost sentiment and the Hong Kong-Shanghai trading link rather than any improvement in the outlook for the world’s second-biggest economy, Cui said in a speech in Tokyo.

Gundlach Optimism

The PBOC is scheduled to release the credit data by Sept. 15. Li will address the World Economic Forum later today in Tianjin. The statistics bureau is due to release August inflation data tomorrow. Consumer prices probably rose 2.2 percent from a year earlier, slowing from a 2.3 percent gain in July, according to the median estimate in a Bloomberg survey.

Other data scheduled from this week include new yuan loans, aggregate financing, industrial production and retail sales.

DoubleLine Capital LP’s Jeffrey Gundlach said the Shanghai Composite is “worth a ride” and that the Indian stock market is his favorite in the world.

The manager of the $35 billion DoubleLine Total Return Bond Fund, said today in a webcast that he is “not really afraid” of Chinese stocks for investors with an appetite for riskier investments. “For the long term, my favorite stock market is the Indian stock market.”