Money

Investor concern on Europe hits stocks

By Zhang Shidong (China Daily)
Updated: 2010-05-15 09:18

An investor monitors share movement at a brokerage in Wuhan,Hubei province.[CHENG YING / FOR CHINA DAILY]

SHANGHAI - China's benchmark stock index fell, paring a weekly gain, on concern government tightening measures including possibly a property tax and European nations' debt cutting will hurt global economic growth.

Jiangxi Copper Co, the nation's biggest producer of the metal, lost 1.2 percent and PetroChina Co slipped 0.7 percent after raw material prices dropped. Poly Real Estate Group Co led declines among developers on speculation the government may impose a tax on residential properties. Kangmei Pharmaceutical Co paced gains among drugmakers after the government said it will support private investment in the healthcare industry.

"Forecasts for corporate earnings growth are likely to be revised downwards because of the debt crisis. We should still be cautious about equities," said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co, which oversees $285 million.

The Shanghai Composite Index retreated 13.9, or 0.5 percent, to 2696.63. The gauge advanced 0.3 percent this week, the first weekly gain in six. The CSI 300 Index declined 0.7 percent to 2868.02. Futures on the May CSI 300 contract, the most active, fell 1.4 percent.

Premier Wen Jiabao struck a cautious note about the world economy, saying the sovereign-debt crisis in some countries is "deepening" and the foundations of a global recovery are not yet "solid".

"We should never underestimate the gravity and complexity of this crisis and its far-reaching impact on the world political and economic landscape," Wen said at a biannual China-Arab ministerial meeting held in Tianjin.

Commodities slide

Jiangxi Copper fell 1.2 percent to 30.63 yuan ($4.49). PetroChina, the nation's biggest oil producer, retreated 0.7 percent to 11.14 yuan. Aluminum Corp of China Ltd, the nation's biggest maker of the lightweight metal, lost 0.8 percent to 10.61 yuan.

Copper for three-month delivery lost 0.7 percent to $7,110 per metric ton in London on Friday, aluminum declined 0.5 percent to $2,160 per ton and zinc fell 0.4 percent to $2,151 per ton.

Crude oil for June delivery dropped as much as 0.8 percent to $73.98 a barrel in after-hours trading in New York.

Ping An Insurance (Group) Co, China's second-biggest insurer, lost 2.2 percent to 48.30 yuan. Shareholder Newbridge Capital LLC, the Asian unit of the US buyout firm TPG Capital, raised HK$9.7 billion ($1.25 billion) selling Hong Kong-listed shares in the insurer, a person familiar with the matter said.

The CSI 300 healthcare index gained 2.1 percent. Kangmei rose 3.1 percent to 14.33 yuan while Tianjin Tasly Pharmaceutical Co gained 4.5 percent to 31 yuan. Beijing Tongrentang Co added 2.4 percent to 28.32 yuan.

Chinese stocks are becoming more attractive after initial share sales and derivative trading pushed the benchmark index to a bear market, investor Mark Mobius said.

Buying opportunities are "getting more and more now with the market going down", Mobius, who oversees about $34 billion in emerging-market assets as executive chairman of Templeton Asset Management Ltd, said. While initial public offerings "draw money out of the market and depress prices, it doesn't mean that the company or economy is not fundamentally sound".

Chinese companies raised $23.5 billion this year through Thursday, about $4 billion less than the total for last year.