China’s stock-index futures fell, signaling the benchmark index may drop, on concern government tightening measures will slow economic growth and curb demand for raw materials.
Jiangxi Copper Co., China’s biggest producer of the metal, may pace declines by commodity producers as metal and oil prices retreated. Heilongjiang Agriculture Co. and Shandong Denghai Seeds Co. may advance among farming-related companies after corn, wheat and soybean futures climbed to the highest since 2008.
Futures on the CSI 300 Index expiring in February, the most active contract, lost 0.1 percent to 3,040.4 as of 9:16 a.m. local time. The Shanghai Composite Index dropped 24.90, or 0.9 percent, to 2,774.07 yesterday, the first trading day after a five-day holiday, after the central bank raised interest rates for the third time in four months. The CSI 300 Index fell 1.2 percent to 3,040.95.
"The latest interest rate increase definitely isn’t the end of the tightening,” said Zhang Qi, an analyst at Haitong Securities Co. in Shanghai. “Some companies especially agricultural stocks may outperform in an inflationary environment because of their ability to raise prices.”
Stocks on the Shanghai gauge trade at 12.98 times estimated earnings, compared with a multiple of 16 at the end of last year, according to weekly data compiled by Bloomberg. The index has tumbled 12 percent from a Nov. 8 high on concern accelerating inflation will prompt tighter monetary policies.
Oil, Metals
Crude oil for March delivery slipped 0.3 percent to $86.71 a barrel in New York yesterday, capping a fifth consecutive decline to the lowest settlement price since Jan. 27. The London Metal Exchange Index of prices for six industrial metals including copper and aluminum dropped 1.2 percent yesterday, the sharpest retreat in two weeks.
China should focus on higher inflation and slow economic growth or rising prices may “ruin the country’s economic and social prospects,” Ma Jun, Deutsche Bank AG’s chief economist for Greater China, wrote in a commentary in the China Daily.
Negative real interest rates have fueled inflation expectations and boosted demand, which prompted the central bank to proportionally increase deposit rates more than lending rates, Ma wrote in the newspaper.
A government report next week may show consumer prices rose 5.3 percent in January, according to the median estimate in a Bloomberg News survey of economists. Government figures expected next week are also forecast to show export growth accelerated in January and producer prices advanced at a faster pace, according to Bloomberg economist surveys.
China may raise fuel prices around Feb. 20 by 400 yuan to 500 yuan a ton, the China Securities Journal reported, citing research company C1 Energy.
China National Software & Service Co. and UFIDA Software Co. may advance after the government said yesterday it will boost the development of the software and chip industry through tax breaks, mergers and government investment.
