China's Stocks Decline to Lowest in 19 Months


China's stocks fell to a 19-month low, extending the worst performance among global equity markets this year, on signs company profit growth is slowing and manufacturing contracted for a second straight month in August.

China Merchants Banks Co. lost 6.6 percent on concern the economy will weaken. Aluminum Corp. of China Ltd. sank 3.7 percent and Suning Appliance Co., the nation's No. 1 appliance maker by market value, tumbled by the 10 percent limit as stock exchange data showed corporate profit growth slowed in the first half. Panzhihua New Steel & Vanadium Co. fell 10 percent after earthquakes damaged the steelmaker's plants and mines.

The CSI 300 Index, which tracks stocks on the Shanghai and Shenzhen exchanges, retreated 82.47, or 3.5 percent, to 2,309.17, the lowest close since Feb. 5, 2007. More than eight stocks rose for every one that declined. All 10 industry groups on the index dropped, with financial companies accounting for 52 percent of the gauge's decline.

The gauge has slumped 57 percent this year, the biggest decline among 89 global indexes tracked by Bloomberg, as government measures to fight inflation and record commodity prices eroded profits.

First-half net income at the 863 companies listed in Shanghai and the 488 on the Shenzhen bourse rose 16 percent from a year earlier, the two exchanges said in separate statements last night. The growth rates were 69 percent for Shanghai and 99 percent for Shenzhen last year, according to exchange data.

The Purchasing Managers' Index, based on a survey of more than 700 companies in 20 industries, was a seasonally adjusted 48.4, unchanged from July, the China Federation of Logistics and Purchasing said today in an e-mailed statement. A reading below 50 reflects a contraction.

The Shanghai Composite Index declined 3 percent to 2,325.14 and the Shenzhen Composite Index sank 3.3 percent to 637.51.


TradingEconomics.com, Bloomberg.com
9/1/2008 6:50:22 AM