China stocks cap longest weekly losing streak

Shanghai -  Chinese stocks fell for a fourth week, capping the longest string of losses in two years, as metal prices dropped and the yuan weakened amid concern the government will hold off from new stimulus even as growth falters.

The Shanghai Composite Index slid 3% this week, led by energy and material companies. The Hang Seng China Enterprises Index fell more than 10% from the April high and was poised to enter a correction.

Data on new loans and money supply will be released as early as Friday, while reports on industrial production and retail sales are scheduled for Saturday. The yuan weakened to the lowest level in two months in Hong Kong.

China’s benchmark stock gauge has slumped 20% this year, making it the worst performer among 95 global benchmark indices tracked by Bloomberg.

The most recent data have showed March’s pick up in economic indicators didn’t carry over to April, with manufacturing gauges and trade figures missing predictions, while a high-profile warning by the People’s Daily about the nation’s high levels of debt have damped hopes for more easing.

“Investors are looking for Chinese data that will be announced over the weekend to see if the economic rebound in March can continue into April,” said Daniel So, a strategist at CMB International Securities in Hong Kong.

Stimulus fades

The Shanghai gauge slipped 0.3% to 2 827.11 at Friday’s close. The CSI 300 Index fell 0.5%. The Hang Seng China index dropped 1.6% as of 09:09, while the Hang Seng Index lost 1.6%.

China should abandon the idea of loosening money conditions to accelerate economic growth, the People’s Daily report said Monday, citing an interview with an “authoritative” person who wasn’t identified.

Data the following day showed consumer prices rose for a third month, increasing speculation faster inflation may cut the odds for more monetary easing.

Gauges of material and energy stocks in the CSI 300 were the worst performers this week, with declines of at least 4%. Yanzhou Coal Mining  plunged 11%.

Shenzhen Zhongjin Lingnan Nonfemet slid 8.9%, while Zhongjin Gold retreated 5.6%. Copper fell 1.4% on Thursday in New York. Gold lost 0.3%, poised for a 1.8% loss this week.

Weekend data

The SGX Asia Clear contract for June settlement in Singapore sank as much as 3.5% to the lowest intraday level since March 4.

It plunged 12% this week, the most since December. In Dalian, iron ore futures tumbled on Friday to the lowest since February as steel in Shanghai headed for the biggest weekly loss on record.

Industrial output is forecast to rise 6.5% in April from a year earlier, according to a Bloomberg survey of economists. That would be a pullback from March’s sharp post-Chinese-new-year-holiday bounce, though stronger than most 2015 readings.

Financial companies declined in Hong Kong, with China Merchants Bank and Huatai Securities slumping at least 3.6%.

New lending probably fell to 800 billion yuan in April from 1.37 trillion yuan a month earlier, according to the median estimate of a Bloomberg survey.

Retail sales are seen increasing 10.6% and fixed-asset investment is seen climbing 11% in the January-April period, according to Bloomberg surveys.

Yuan weakens

Chow Tai Fook Jewellery Group fell 3.4% in Hong Kong, heading for the lowest close in a month.

The world’s largest jewelry retailer said full-year profit plunged as much as 50% as weak Chinese consumer demand undercut revenue and it posted hedging losses on gold loans.

The yuan dropped 0.1% against the dollar on Friday in Hong Kong to the lowest since March 2.

"The market is getting pessimistic about the yuan, as recent data suggest that the economy slowed in April and the dollar resumed strength," said Banny Lam, Hong Kong-based co-head of research at Agricultural Bank of China International Securities.