China's stocks drop for first time in five days on valuations
Thursday, 6 August 2009
SHANGHAI, Aug. 5 (Bloomberg): China's stocks fell for the first time in five days, led by commodities producers and banks, on concern the market's recent rally has made the nation's equities too expensive.
Jiangxi Copper Co., the nation's largest producer of the metal, dropped 2.2 per cent. The company, whose shares have more than quadrupled this year, said last week first-half profit may decline by more than half. Industrial Bank Co. fell 3.8 per cent, its biggest retreat in a month, after almost tripling in 2009, while Poly Real Estate Group Co. slipped 2.7 per cent.
The Shanghai Composite Index fell 42.94, or 1.2 per cent, to 3,428.50 at the close, snapping a four-day, 6.3 per cent advance. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, slid 1.2 per cent to 3,740.94.
The Shanghai gauge has gained every month this year, doubling from last year's low, as record bank lending and government stimulus spending spur a rebound in the economy. Shares on the index trade at 37.3 times reported earnings, near an 18-month high and twice the level of emerging markets.
Individual investors opened 700,617 accounts to trade stocks last week, the most since January 2008, according to data from the country's clearing house.
Chinese stocks may slump by as much as 18 per cent within the next three months, Carter Worth, chief market technician at Oppenheimer & Co., said this week. "The market does not go higher from here," Worth said. "There has been virtually no pullbacks and it needs to pull back to be healthy."
Jiangxi Copper Co., the nation's largest producer of the metal, dropped 2.2 per cent. The company, whose shares have more than quadrupled this year, said last week first-half profit may decline by more than half. Industrial Bank Co. fell 3.8 per cent, its biggest retreat in a month, after almost tripling in 2009, while Poly Real Estate Group Co. slipped 2.7 per cent.
The Shanghai Composite Index fell 42.94, or 1.2 per cent, to 3,428.50 at the close, snapping a four-day, 6.3 per cent advance. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, slid 1.2 per cent to 3,740.94.
The Shanghai gauge has gained every month this year, doubling from last year's low, as record bank lending and government stimulus spending spur a rebound in the economy. Shares on the index trade at 37.3 times reported earnings, near an 18-month high and twice the level of emerging markets.
Individual investors opened 700,617 accounts to trade stocks last week, the most since January 2008, according to data from the country's clearing house.
Chinese stocks may slump by as much as 18 per cent within the next three months, Carter Worth, chief market technician at Oppenheimer & Co., said this week. "The market does not go higher from here," Worth said. "There has been virtually no pullbacks and it needs to pull back to be healthy."