Markets

Mainland stocks fall on concerns over inflation

By Zhang Shidong (China Daily)
Updated: 2010-11-04 09:52

SHANGHAI - Mainland stocks fell for a second day on concern that the government may join other Asian nations in taking measures to slow inflation and that valuations for the biggest commodity producers were excessive after last month's rally.

Jiangxi Copper Co and Datong Coal Industry Co lost at least 5 percent on speculation US economic measures may miss investors' expectations. Industrial & Commercial Bank of China Ltd climbed the most in three weeks, pacing gains for lenders, on easing concerns over local government loans.

"We haven't seen the start of another growth cycle for China's economy yet and inflation is looming," said Zheng Tuo, president of Shanghai Good Hope Equity Investment Management Co. "The current scenario won't support a further massive run-up for equities. Consumer stocks may be a good haven for investors as they will probably pass on rising costs."

The Shanghai Composite Index dropped 0.47 percent to 3,030.99 at the 3 pm close on Wednesday, after changing directions about 10 times. The CSI 300 Index fell 1.2 percent to 3,420.34 on Wednesday, led by energy, material and technology companies.

Gauges of material and energy stocks slumped 4.5 percent and 3 percent respectively on Wednesday, the two most among the 10 industry groups in the CSI 300. They surged 21 percent and 29 percent respectively in October.

A measure of financial stocks advanced 1.1 percent on Wednesday, the most among industry groups and trimming its loss to 16 percent this year.

A gauge of consumer staples gained 0.1 percent in the CSI 300, benefiting from speculation that beverage makers will be able to increase prices to boost their earnings.

Hang Seng gains

Hong Kong stocks rose, pushing the benchmark index to its highest close in more than two years.

The Hang Seng Index climbed 2 percent to 24,144.67 on Wednesday, its highest close since June 2008, with developers posting the biggest gains.

The Hang Seng China Enterprises Index of H shares of mainland companies jumped 2.2 percent to 13,820.99 on Wednesday.

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