| Mainland stocks fall most in a month |
SHANGHAI, May 15 -- CHINESE mainland stocks fell the most in a month as investors judged gains this year to be excessive relative to earnings growth potential. Lenders including China Minsheng Banking Corp and China Merchants Bank led the declines.
Consumer stocks including Inner Mongolia Yili Industrial Group Co climbed after a government report showed the nation's retail sales increased last month. Bank of Communications Ltd, China's sixth largest, surged 71 percent on its debut in Shanghai.
"Some investors have stepped up selling to lock in profit, expecting there is going to be a major correction ," said Fan Dizhao, who helps manage the equivalent of US$1.8 billion at Guotai Asset Management Co in Shanghai. "April's retail sales figure is pretty good and supports the long-term stable trend of spending," and will boost consumer-related stocks.
Shanghai's foreign-currency shares fell for the first day in 10, ending the longest winning streak in four months.
The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, lost 3.6 percent to 3,899.18. The Shenzhen Composite Index, which covers the smaller one, retreated 2.6 percent to 1,097.94.
Credit Suisse Group expects mainland policy makers will take steps to cool the local stock market. These may include raising interest rates, taxing share transactions, selling state-owned shares or the use of "harsh comments" by senior officials.
"We expect to see an approximate 30 percent correction of share prices," Credit Suisse economist Dong Tao said in a research note published today.
Banks led the declines. Minsheng Banking, the nation's first privately controlled lender, fell 0.91 yuan (12 US cents), or 6.3 percent, to 13.53 yuan. China Merchants Bank, China's seventh-largest lender, lost 1.36 yuan, or 6.1 percent, to 20.80 yuan.
Shanghai Pudong Development Bank, the Chinese partner of Citigroup Inc, fell 2.19 yuan, or 7.5 percent, to 27.07 yuan. Industrial & Commercial Bank of China, the nation's largest bank, slid 0.24 yuan, or 4.2 percent, to 5.51 yuan.
In other industries, China Vanke Co, the nation's biggest property developer, lost 1.09 yuan, or 4.5 percent, to 22.97 yuan. Baoshan Iron & Steel Co, China's biggest steelmaker, fell 0.65 yuan, or 4.9 percent, to 12.63 yuan.
Equities also fell after China's securities regulator ordered the country's fund management companies to not get involved in speculative buying of shares, state-run Securities Times reported, citing a circular from an unspecified regulator.
Fund managers must be wary of "liquidity risks" and are barred from owning more stocks than they're capitalized for, the Shenzhen-based newspaper said.
Yili Industrial, China's biggest dairy producer by sales, gained 1.00 yuan, or 3.3 percent, to 31.10 yuan. Baoding Tianwei Baobian Electric Co, an electrical equipment manufacturer and distributor, jumped 5.9 yuan, or the daily cap of 10 percent, to 64.76 yuan.
Shanghai Yuyuan Tourist Mart Co, a retailer of gold and jewelry, jumped 2.32 yuan, or 6.8 percent, to 36.41 yuan. Shenyin & Wanguo Securities Co has a target price of 60 yuan for the company, citing a strengthening yuan and earnings growth from new projects, the brokerage said in a report today.
Retail sales climbed 15.5 percent to 667.3 billion yuan last month after gaining 15.3 percent in March, the National Bureau of Statistics said today. That was the biggest increase since May 2004 when the first two months of each year are combined to eliminate Lunar New Year holiday distortions.
Bank of Communications rose 5.64 yuan, or 71 percent, to 13.54 yuan on its first day of trading in Shanghai. It gained as much as 90 percent from its offer price of 7.90 yuan.
Bocom's US$3.3 billion sale drew a record US$188 billion of orders.
Shanghai's index of foreign-currency B shares fell 1.9 percent to 310.68, after gaining for the nine previous days. The gauge for Shenzhen B shares retreated 3.3 percent to 739.68.
China's B shares have gained since March amid speculation that the stocks will be merged with the more expensive, yuan-denominated A shares. The B shares, which can be bought and sold only by domestic individuals and overseas investors, are traded in US dollars in Shanghai and Hong Kong dollars in Shenzhen.
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