Chinese Stocks Go Down

For the 2nd straight day, Chinese stocks have gone down, thereby, dragging the benchmark stock gauge to a lower level. The stocks were affected as Kweichow Moutai Co. reported slow profit growth and the commodity prices declined too. According to the Analyst of West China Securities, Wei Wei, the slowing trend in the economy of China is yet to be over and the decline in the global metal prices have sort of curtailed the appetite for the riskier assets. Wei added that as the home prices are increasing, it becomes hard for the Chinese Government to loosen the policies.

The benchmark stock gauge of China, the Shanghai Composite Index declined by 0.6% to 2180.37 on today. On the other hand, the CSI 300 Index plummeted by 0.7% as well to 2,440.81. If the figures of the

Hang Seng China Enterprises Index of Chinese companies trading at Hong Kong are considered, the same went down by 0.3%.

The CH55BN, which measures the most traded US listed Chinese companies, went down by 2.4%. On the other hand, the industrial companies and telecommunications providers, both went down on speculation that the slower economic growth will erode the industry earnings.

On 6th February, the Shanghai Composite Index went to a high figure, but, since then, it has declined by 10%. The investors are concerned that any measure to cool the property prices will have a detrimental effect on the economic growth of the country. Valuations on the Chinese gauge declined to 9 times projected 12-month earnings on yesterday, nearing the lowest level since 31st December. Trading volume in the Shanghai Index was 33% less than the average of last 30 days. On the other hand, the 30-day volatility of the gauge is at 15.2 currently, marking the lowest level of the same since 4th December.

Among companies, as copper prices slumped by the daily limit in Shanghai, Jiangxi Copper Co. lost by more than 2%. On the other hand, the biggest maker of baijiu liquor in China, Kweichow Moutai went down for the first time in last 5 days as the 1st quarter profit of the company increased less than half the pace of the year earlier period. On the other hand, the financial stocks experienced declines, whereas, the losses were led by Industrial Bank Co. Home prices in China increased by 68% in the 1st quarter of 2013.

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