China stocks fall on concerns inflation may be gathering pace

China stocks fell on Monday as investors sold after data suggested inflation, at a 20-month high last month, may be quickening

PUBLISHED : Monday, 28 March, 2016, 9:52am
UPDATED : Monday, 28 March, 2016, 5:29pm

China stocks fell on Monday on worries that inflation — which rose to a 20-month high last month — may be quickening.

The Shanghai Composite index rose above 3,000 in the morning session before retreating and closed at 2,957.82. That’s a 0.73 per cent fall, or 21.61 points. The blue-chip CSI 300 closed 088 per cent lower, or 28.09 points, at 3,169.73.

The Shenzhen Composite index dipped 0.56 per cent or 10.52 points, to 1,874.66 while the NASDAQ-style ChiNext Price Index slid 0.74 per cent, or 16.40 points, to close at 2,199.69.

Shares of property developers, brokerage firms and banks led the declines. The A-share of Citic Securities fell 2.40 per cent to 17.07 yuan, the lowest since March 18. Ping An Insurance Group shares decreased 1.87 per cent to a two-week low of 31.46 yuan.

Total turnover of the Shanghai and Shenzhen markets increased to 626.1 billion yuan, compared with 554.3 billion yuan last Friday.

The Hong Kong stock market is closed for Easter holidays and reopens on Tuesday. The blue-chip Hang Seng index ended 1.31 per cent lower at 20,345.61 last Thursday, a third consecutive lower close.

The pork price, a major composite of China’s consumer price index which measures inflation, reached 28.6 yuan per kilogram last week, up 35.2 per cent from a year earlier, according to Soozhu.com, a website that monitors domestic pork prices.

Chinese inflation was an annual 2.3 per cent in February, exceeding market expectations of 1.8 per cent and marked the largest rise since July 2014.

“Investors are worried about the [possible rise of] inflation, which could hinder the policy makers from keeping an easing monetary environment,’’ Zhu Bin, an analyst at Southwest Securities, said.

If the inflation data for March shows a further increase, the stock market may be pressured, Zhu said.

Positive industrial data helped stocks of producers of composite materials and machinery tools rise.

On Sunday, the National Bureau of Statistics said profits from industrial companies increased 4.8 per cent in the January-February period from a year earlier. It was the first increase since May.

“This rebound in industrial production growth, together with further policy easing measures such as tax cuts and interest rate cuts, should provide some support to profit growth,” Goldman Sachs said in a research report on Monday.

Shanghai Maling Aquarius, a food supplier to Shanghai Disneyland, rose 5.27 per cent to its highest level since January 6 at 11.78 yuan. The mainland’s first Disney theme park sold out of tickets for its opening day of June 16.

Last week, the Shanghai Composite Index rose 0.81 per cent, posting a second week of gains.

business-article-page