| Stocks drop from record, clipping bullish run |
SHANGHAI, Jan. 25 -- Stocks on the Chinese mainland fell for the first day in six on concern the key index's climb to an all-time high more than reflected the potential for earnings growth. Industrial & Commercial Bank of China Ltd led declines among stocks that had risen the most, Bloomberg reported.
"The market is now staying at a sensitive level, causing split views on the outlook,"' said Tony Zheng, who manages about US$1.95 billion at Fortis Haitong Investment Management Co in Shanghai. "Some investors are selling to take profit for safety's sake."
Stocks also fell after the statistics bureau said China's economy grew faster-than-expected in the last quarter and inflation accelerated, fueling speculation the government will raise interest rates to rein in expansion.
The Shanghai Composite Index, which tracks the bigger of the mainland's stock exchanges, fell 4.0 percent to 2,857.36. The Shenzhen Composite Index, which covers the smaller one, lost 4.3 percent to 675.78.
The Shanghai and Shenzhen 300 Index, which tracks yuan-denominated A shares listed on the mainland's two exchanges, lost 83.60, or 3.3 percent, to close at 2,452.83. The measure, which closed at a record yesterday, has surged 20 percent this year.
The index's 14-day relative strength measure, a moving average based on whether the gauge rose or fell, was 84 at yesterday's close. A reading above 70 signals to some analysts the market is poised for a fall.
ICBC, the nation's biggest lender, slid 0.25 yuan, or 4.5 percent, to 5.28 yuan. Bank of China Ltd, the second largest, retreated 0.25 yuan, or 5 percent, to 4.79 yuan.
"Some stocks, such as banks, and those heavily weighted in the main indexes, have been pushed beyond reasonable levels,'' said Ke Shifeng, a fund manager at Martin Currie Investment Management Ltd in Shanghai.
ZTE Corp, the mainland's biggest publicly traded phone-equipment maker, dropped 3.14 yuan, or 6.8 percent, to 42.86 yuan. Baoshan Iron & Steel Co, the mainland's biggest steelmaker, lost 0.59 yuan, or 5.9 percent, to 9.49 yuan.
The economy grew 10.7 percent in 2006, the fastest in more than a decade, and inflation accelerated to a 22-month high of 2.8 percent in December, according to figures released today by the statistics bureau. Economists predicted 10.5 percent growth and a 1.9 percent increase in consumer prices, Bloomberg surveys showed.
"The GDP figure, though not totally unexpected, is a bit on the high side," said Zhang Qi, an analyst at Haitong Securities Co in Shanghai. "That may add to investor concerns that a rate hike could come sooner than later."
The world's fastest-growing major economy expanded at more than twice the global average as record exports swelled foreign- currency reserves to more than US$1 trillion and fanned tension with the US and Europe. Premier Wen Jiabao wants to boost consumer spending to reduce the country's reliance on shipments overseas and avoid igniting investment bubbles.
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