advertisement

China’s stocks drop on investment slump

China’s stocks fell from a two-month high as a slump in foreign direct investment and delays in a European aid package for Greece overshadowed speculation the government will introduce measures to bolster economic growth.

Jiangxi Copper Co. and Aluminum Corp. of China Ltd. led declines for metal producers after European officials postponed a decision on a $169 billion bailout for Greece. Huayi Brothers Media Corp., China’s biggest listed filmmaker, jumped 2 percent, pacing a rally for media stocks as the government pledged to support the “culture” industry.

“The fundamentals of the economy aren’t good and monetary policy will still be kept relatively tight this year,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages about $120 million. “But investors anticipate the government will have measures to support equities. Stocks will be volatile for the moment.”

The Shanghai Composite Index slipped 4.24 points, or 0.2 percent, to 2,362.46 at the 11:30 a.m. local-time break, erasing a gain of 0.3 percent. Six stocks fell for every five that rose on the measure. The CSI 300 Index lost 0.3 percent to 2,541.83. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, added 0.9 percent yesterday.

The Shanghai Composite has rebounded 10 percent from a Jan. 5 low on speculation the central bank will cut lenders’ reserve- requirement ratios to spur growth. It announced a reduction in reserve ratios on Nov. 30, the first since 2008, after boosting them and interest rates last year to cool inflation.

Foreign investment fell for the third month in January, commerce ministry data showed. FDI declined 0.3 percent from a year earlier to $9.997 billion, the ministry said in a statement. That followed a 12.7 percent drop in December and a contraction the previous month that was the first since 2009.

The outlook for foreign direct investment in China this year is “grim,” Shen Danyang, spokesman for the ministry said in Beijing today.

Jiangxi Copper, China’s biggest producer of the metal, lost 0.9 percent to 26.54 yuan. Chalco, the listed unit of the nation’s biggest maker of the lightweight metal, fell 0.8 percent to 7.23 yuan.

Article Comments
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the "flag" link in the lower-right corner of the comment box. To find our more, read our FAQ.