China’s stocks fell, dragging the Shanghai Composite Index lower for a second day, on speculation tighter monetary policies to counter inflation will slow the country’s economic growth.
Agricultural Bank of China Ltd. dropped 0.8 percent after the Economic Observer reported regulators are assessing data from lenders to finalize new supervisory requirements. PetroChina Co. led declines among commodity companies on concern raw-materials demand will fall.
The Shanghai Composite, which tracks the bigger of China’s stock exchanges, fell 16.73, or 0.6 percent, to 2,854.97 as of 11:30 a.m. break. It declined 0.9 percent on Nov. 26. The CSI 300 Index dropped 0.6 percent to 3,175.53.
"Investors remain cautious on speculation of tighter policies including interest rate hikes,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “The fluctuations will continue with downward pressure.”
The Shanghai gauge has slumped 9.6 percent since reaching an almost seven-month high on Nov. 8 on concern that accelerated monetary tightening will crimp economic growth. The central bank has ordered banks to set aside larger reserves twice in two weeks after raising interest rates in October, the first increase since 2007.
Stocks fell today even after European governments sought to quell market turmoil by agreeing to give debt-strapped Ireland an 85 billion-euro ($113 billion) aid package and diluting proposals to force bondholders to cover a share of future bailouts. The MSCI Asia Pacific Index climbed 0.6 percent, the biggest gain in a week.
Bank Regulator
Agricultural Bank lost 0.8 percent to 2.62 yuan after the Economic Observer’s report. Industrial & Commercial Bank of China Ltd. fell 0.9 percent to 4.28 yuan.
The banking regulator will require lenders to maintain a minimum overall capital adequacy ratio of 8 percent, plus 2.5 percent of surplus capital and another countercyclical buffer of up to 2.5 percent, the Economic Observer report said.
Agricultural Bank and Bank of Communications Co.’s Hong Kong-listed shares were cut to “neutral” from “overweight” by JPMorgan analysts including Samuel Chen. The analysts also downgraded Bank of China Ltd.’s Hong Kong and Shanghai shares.
Gauges of materials and energy producers in the CSI 300 Index posted the largest and third-largest declines of 10 industry groups. PetroChina, the nation’s No. 1 oil company, dropped 0.5 percent to 10.93 yuan.
Biggest Refiner
Jiangxi Copper Co., the top producer of the metal, fell 2.8 percent to 34.01 yuan. Aluminum Corp. of China, the listed unit of China’s biggest maker of the lightweight metal, dropped 1.9 percent to 10.16 yuan.
China Petroleum & Chemical Corp., the nation’s biggest refiner, lost 0.5 percent to 8.15 yuan. Asian oil-refiners’ processing profits are unlikely to return to pre-recession levels next year because of a slow recovery in oil-product demand, Fitch Ratings Ltd. analysts wrote in a report today.
The Shanghai Futures Exchange will increase the proportion of cash that traders must deposit with brokerages on copper, aluminum, steel wire, gold and fuel oil transactions to 10 percent of the total value after the market closes today. It will raise the limit on daily changes in prices to 6 percent starting on Nov. 30.
"The past weekend was almost vacuum for news on government policies,” said Dazhong’s Wu. “That added uncertainties regarding the future control measures in the market.”
Medicine, Liquor
Measures of healthcare and consumer-staples stocks in the CSI 300 advanced the most among the broader index’s groups as investors bet earnings in the two industries will weather tighter monetary policies.
Shanghai Fosun Pharmaceutical Group Co. rose 1 percent to 14.87 yuan, set for the highest close since Nov. 11. Yunnan Baiyao Group Co., a traditional Chinese medicine maker, increased 1.8 percent to 67.01 yuan.
Anhui Gujing Distillery Co. surged 8.7 percent to 89.70 yuan, set for the highest close since its listing in October, 1996. The company plans to raise as much as 1.3 billion yuan from a private placement of as many as 20 million shares, according to a statement from the Chinese liquor maker to Shenzhen’s stock exchange.
