Update | Anhui Conch drops most in nearly two years in Shanghai as cement demand falls amid cold weather
Shares of the cement maker tumbles most since February 2016 in Shanghai after clinker prices fell by 30pc in eastern China
Anhui Conch Cement, the nation’s biggest maker of the building material, tumbled the most in almost two years in Shanghai trading on concern that the recent gains were excessive and a price drop in the east China region as demand slows.
The stock slumped 7.3 per cent to 31.24 yuan on Thursday, the biggest decline since February 2016. Trading volumes more than doubled the 30-day average, according to data compiled by Bloomberg. Its Hong Kong-traded shares plunged 5.7 per cent to HK$40.45, the steepest drop in a month.
Until Wednesday, Anhui Conch had soared 15 per cent this year, adding to a 73 per cent surge in 2017. The stock’s 14-day relative strength index, a gauge of how rapidly securities prices change, rose to 73 on Monday, above the 70 level seen by some traders as a signal that stocks are being overbought.
Further fuelling the sell-off on the stock was the news that prices of cement and clinker, the raw material used to make the building material, dropped in the eastern provinces of Jiangsu and Anhui as cold weather slows construction activities.
Clinker prices in the two provinces fell by at least 30 per cent, according to ccement.com, which tracks prices of the building material across the country.
“Investors are taking profits from the stock and other cyclical companies because of the oversized gains over the past year,” said Zhang Haidong, chief investment officer at Jinkuang Investment Management in Shanghai. “The rally in the cyclical stocks is probably coming to an end now and we expect the economy to weaken a bit this year.”