April 11 (Bloomberg) -- China’s stock-index futures fell on concern Europe’s debt crisis is worsening and companies in Chongqing may drop after the former top official in the city was suspended from his Communist Party posts.
Futures on the CSI 300 Index expiring in April, the most active contract, lost 0.3 percent to 2,500 as of 9:20 a.m. local time. Chongqing Brewery Co. may lead a decline for companies in the municipality after the official Xinhua News Agency said Bo Xilai was removed from the Politburo. China Shipping Development Co. may retreat after forecasting a first-quarter loss. Kweichow Moutai Co. may rise after 2011 net income jumped 74 percent.
The Shanghai Composite Index climbed 20.09 points, or 0.9 percent, to 2,305.86 yesterday. The CSI 300 Index rose 1 percent to 2,519.79. The Bloomberg China-US 55 Index, the measure of the most-traded U.S.-listed Chinese companies, retreated 2.5 percent in New York.
The Shanghai Composite reversed a loss of as much as 1.2 percent in the last hour of trading yesterday as some investors said measures may be introduced at today’s regular meeting of the State Council, or cabinet. About 6.7 billion shares changed hands in the gauge yesterday, 23 percent lower than the daily average this year. Thirty-day volatility was at 17.8, the lowest level this month.
The Shanghai index has gained 4.8 percent this year on speculation the government will cut lenders’ reserve requirements and possibly interest rates to boost the economy. Stocks in the gauge are valued at 9.7 times estimated earnings, compared with a record low of 8.9 times on Jan. 6, according to weekly data compiled by Bloomberg.
The MSCI Asia Pacific Index retreated 0.6 percent today after Spanish bonds slumped after Economy Minister Luis de Guindos declined to rule out a rescue and Bank of Spain Governor Miguel Angel Fernandez Ordonez said the nation’s lenders may need more capital if the economy weakens more than expected. The Italian 10-year yield rose 23 basis points to 5.69 percent, sending the spread over bunds to 4.04 percentage points, the most since Jan. 31 on a closing basis.
Europe is China’s biggest export market, making up about 18 percent of the nation’s overseas shipments, according to Shenyin & Wanguo Securities Co.
China trade data yesterday showed an unexpected surplus for March and slowing growth in imports and exports. Overseas shipments rose 8.9 percent last month, more than economists’ forecast. Still, it was down from 18.4 percent growth in February.
“The slowdown in export growth was broad-based with the biggest drag coming from Europe, driven by the sovereign debt crisis that remains to be fully resolved,” HSBC Holdings Plc econimists Xiaoping Ma and Hongbin Qu said in a report yesterday. Exports to the European Union contracted by 3.1 percent in March, it said.
“Net exports will likely become a major drag on GDP growth” in the first quarter, the HSBC economists wrote. “This reinforces the need for further easing.”
The statistics bureau is due to report the nation’s first- quarter gross domestic product and other March data including industrial production on April 13. The economy probably grew 8.4 percent in the first three months of the year, according to the median estimate of 38 economists surveyed by Bloomberg. The economy expanded 8.9 percent in the fourth quarter of 2011, the least in 10 quarters.
Chongqing-related stocks may decline after an investigation led to Bo’s wife being arrested on suspicion of murdering a U.K. citizen. Gu Kailai and a domestic helper are “highly suspected” of killing British businessman Neil Heywood, who died in Chongqing in November, Xinhua reported late yesterday. The U.K. was originally told that Heywood died of alcohol poisoning.
Next page: On U.S. shores
Chinese equities in the U.S. slid to a two-month low, led by consumer stocks, as import growth that trailed economists’ estimates added to concern that the world’s second-largest economy is faltering.
The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. sank 2.5 percent to 99.44 yesterday in New York, the lowest level since Jan. 31. Online book retailer E-Commerce China Dangdang Inc. and budget hotel operator Home Inns & Hotels Management Inc. dropped the most in more than a month. Semiconductor Manufacturing International Corp. rose after lifting its first-quarter sales forecast, narrowing the New York shares’ discount to Hong Kong.
China ETF Sinks
Imports into China in March increased at almost half the pace predicted by analysts surveyed by Bloomberg, with the rate of growth more than seven times less than in February, customs data released yesterday showed.
“Economic growth seems to be near its bottom,” said Jeff Papp, a senior analyst in Lisle, Illinois at Oberweis Asset Management Inc., which manages $700 million of assets including Chinese stocks. The slump in Chinese equities, fueled by revived concern about Europe’s debt crisis, will be temporary, and “the government will ease monetary policy further to stimulate consumption, which will help boost company profits,” Papp said.
China’s central bank has cut reserve requirements ratios for banks twice since November and has kept benchmark interest rates on hold since July. Zhang Zhiwei, chief China economist at Nomura Holdings Inc., expects policy makers to reduce interest rates this month and to decrease the reserve ratio twice more this year starting in May, according to a report released yesterday.
The IShares FTSE China 25 Index Fund, the biggest Chinese exchange-traded fund in the U.S., sank 1.7 percent yesterday in its second day of declines to a three-month low of $35.75. The Standard & Poor’s 500 Index fell for the fifth day, the longest losing streak since November, as a surge in Spanish and Italian bond yields fueled concern Europe’s debt crisis is worsening.
Home Inns, which runs budget hotels in China, tumbled 3.9 percent to $25.63 yesterday in New York, the biggest one-day drop since March 9. Sales for the Shanghai-based company may have slipped to 1.15 billion yuan ($180 million) in the first quarter, from 1.31 billion yuan in the previous three months, according to the median of three analysts’ estimates compiled by Bloomberg. That compares with Home Inns’ forecast of as much as 1.24 billion yuan in sales issued on March 8.
American depositary receipts of E-Commerce, known as Dangdang, slid 4.9 percent to $10.18, the steepest daily loss since March 5. The ADRs rose to an eight-month high of $10.70 on April 9 and have surged 131 percent this year.
Five out of 12 analysts recommend that investors buy Dangdang stock while five rate it hold and two recommend selling the shares, data compiled by Bloomberg show.
China’s imports rose 5.3 percent in March, the customs bureau said yesterday, below the 9 percent median estimate in a Bloomberg survey and down from a 39.6 percent jump in February.
ADRs of Semiconductor Manufacturing, based in Shanghai, jumped 2.9 percent to $2.47 in U.S. trading, the biggest one-day rally since March 23, after the company raised its forecast for first-quarter sales and gross margin.
Semiconductor’s revenue for the first quarter of this year will rise between 14 percent and 15 percent from the previous three months, the company said in a statement yesterday, up from a Feb. 8 forecast for growth of 7 percent to 9 percent. Semiconductor also increased its estimate for gross margin, a measure of profitability, to as much as 12 percent from a previous forecast of 7 percent.
Muddy Targets Fushi
The Shanghai-based company’s ADRs, each representing 50 common shares in Semiconductor, traded 4.1 percent below its Hong Kong stock, which climbed 2.6 percent to 40 HK cents, the equivalent of 5 U.S. cents. The discount was 4.4 percent on April 9.
Fushi Copperweld Inc., a maker of copper-clad metal wire based in Beijing, gained 5.4 percent to $6.10 by the close of trading in New York, snapping a four-day decline. The stock, which was listed on the Nasdaq Composite Index in August 2007, earlier surged as much as 38 percent to $8, the biggest intraday advance since Sept. 8, 2006. Trading volumes reached 6.6 million shares, 16 times the three-month daily average.
Short-seller research firm Muddy Waters LLC said the company presents “a high risk of fraud” in an online posting yesterday. Fushi was prepared for its U.S. listing by a “fraud school” run by investment banks, law firms, accountants and consultants, according to the posting.
Thomas Horton, global marketing director for Fushi, declined to comment when contacted by phone. Jolin Qiao, Fushi’s investor relations officer, didn’t reply to an e-mail.
--Zhang Shidong, Belinda Cao. Editors: Allen Wan, Darren Boey