China"s Stocks Fall as Coal Shares Drop Amid Pollution Concerns

China’s stocks fell as coal companies

slumped after Shanghai reported record-high levels of pollution,

while financial shares slid before trade data this weekend.

Environmental-protection stocks rose.

China Shenhua Energy Co., the biggest coal producer, and a

a gauge of energy shares dropped the most in two weeks as

Masterlink Securities Corp. said worsening pollution may spur a

shift away from fossil fuels. Citic Securities Co. and Haitong

Securities Co., the two largest brokerages, sank more than 2

percent after rallying earlier this week on regulators’ plan to

resume initial public offerings. Fujian Longking Co., which

makes pollution control equipment, advanced 0.8 percent.

The Shanghai Composite Index (SHCOMP) slipped 0.4 percent to

2,237.11 at the close, paring this week’s gain to 0.8 percent.

Trade data scheduled for Dec. 8 will probably show China’s

exports rose in November from the previous month.

“There’s uncertainty before data so there’s a lack of

confidence to drive the index higher,” said Zhang Yanbing,

analyst at Zheshang Securities Co. in Shanghai. “The pollution

is worse today. This is good for environmental stocks.”

The CSI 300 Index fell 0.6 percent to 2,452.29. The Hang

Seng China Enterprises Index slipped 0.1 percent. The ChiNext

index of small-cap stocks rose 0.4 percent, paring this week’s

decline to 12 percent.

China’s exports probably gained 6.5 percent in November,

compared with a 5.6 percent advance in the previous month,

according to a Bloomberg survey of 29 economists. Consumer-price

inflation probably slowed to a 3.1 percent rate last month,

compared with 3.2 percent in October, according to economists’

median estimates.

Economic Data

Industrial output probably remained unchanged at 9.7

percent in November from the previous month. Data on CPI and

industrial output are scheduled for release on Dec. 9 and 10

respectively.

“We expect November activity data to show slower growth in

industrial production and fixed asset investment,” Barclays Plc

economist Jian Chang wrote in a report. “Export growth could

pick up in November, but mainly due to favorable base effects.”

A measure of energy producers in the CSI 300 slid 1.4

percent, the second most among 10 industry groups. China

Shenhua, the biggest coal producer, dropped 0.9 percent to 17.05
yuan. Yanzhou Coal Mining Co. fell 1 percent to 10.10 yuan.

“Bad pollution in Shanghai recently prompted investors to

be concerned if there would be changes to energy use in

future,” Li Xin, an analyst at Masterlink Securities, said by

phone in Shanghai today.

Environmental Protection

A heavy fog shrouding Shanghai caused widespread flight

cancellations as the worst pollution levels since government

monitoring prompted the city to order vehicles off the road and

factories to cut production.

The city’s air quality index jumped to 503 by 2 p.m.,

putting it in the “beyond index” category, the U.S. consulate

in Shanghai said on its website. The Shanghai government said

air quality surged to the “severe” category, the highest in a

six-tier rating system, according to its own monitoring system.

Fujian Longking paced gains for environmental protection

companies, rising 0.8 percent to 35.46 yuan. Yonker

Environmental Protection Co. added 0.7 percent to 27.34 yuan.

Shanghai Waigaoqiao Free Trade Zone Development Co. dragged

down a gauge of property companies, losing 3.8 percent to 36.88

yuan. The shares had gained 12 percent over a three-day rally

after the central bank said it plans to implement reform

measures for the city’s trade zone within three months.

Shanghai-based companies have led the index’s 15 percent

rally from a four-year low in June as the government approved

the zone as part of a wider package of economic reforms

announced last month. Chinese leaders are expected to provide

more details on new economic policies and unveil growth targets

at a conference this month.

Hermes Fund

Haitong Securities, the second-biggest listed brokerage,

fell 3.8 percent to 11.94 yuan. Citic Securities, the largest-listed brokerage, slumped 2.6 percent to 13.10 yuan. They both

reported yesterday that net income fell last month.

China’s move to end a 14-month ban on IPOs and allow the

sale of preferred shares led to a rally in financial stocks

earlier in the week as investors bet the measures will boost

fees for brokerages and ease banks’ funding.

Hermes Fund Managers Ltd., which beat 88 percent of its

emerging-market peers this year, is boosting holdings of Chinese

stocks after the government pledged to open up the economy to

more investment to fuel growth.

China Reforms

Hermes has added shares of companies listed in the mainland

bourses, including Kweichow Moutai Co., Gree Electric Appliances

Inc., Huayu Automotive Systems Co. and Daqin Railway Co., the

London-based asset manager said.

China’s broadest economic reforms since the 1990s will add

less than half a percentage point to annual growth this decade,

a survey showed, underscoring the likelihood of a cut in the

nation’s expansion target.

Fourteen of 19 economists see policies from a Communist

Party summit last month boosting gross domestic product either

by a negligible amount or less than 0.5 percent a year compared

with their previous outlook, according to the Bloomberg News

survey. Ten analysts say China will need at least a small amount

of monetary, fiscal and credit stimulus to meet the government’s

“bottom line” of 7 percent growth in the next five years.

To contact the reporter on this story:

Weiyi Lim in Singapore at

wlim26@bloomberg.net

To contact the editor responsible for this story:
Michael Patterson at

mpatterson10@bloomberg.net

Dec. 6 (Bloomberg) — Jing Ulrich, vice chairman of Asia Pacific at JPMorgan Chase Co., talks about the outlook for China’s economic and financial reform plan.

She speaks with Rishaad Salamat on Bloomberg Television’s “Asia Edge.” (Source: Bloomberg)

China"s Stocks Fall as Coal Shares Drop Amid Pollution Concerns