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China’s stocks post longest weekly losing streak

May 27 2016 13:14
Fox Hu

Hong Kong - China’s stocks capped their longest stretch of weekly losses since July 2012 amid concern a pick-up in earnings growth is losing steam as the nation’s economy slows.

The Shanghai Composite Index fell for a sixth week after slipping 0.1% by Friday’s close. Industrial, drug and consumer-staples producers were the worst performers this week. China Southern Airlines and Air China slumped more than 5% during the period, hurt by rising fuel prices and a weakening yuan. Data on Friday showed industrial companies’ profit growth slowed to 4.2% in April.

Sentiment toward Chinese stocks turned bearish after March’s pick up in economic indicators didn’t carry over to April and a high-profile warning by the People’s Daily about the nation’s high levels of debt damped hopes for more easing.

Adding to the concern this week is the prospect of higher US interest rates spurring capital outflows. Despite dwindling optimism, the Shanghai Composite hasn’t strayed more than 51 points from 2 800 in the past two weeks, with declines limited by suspected buying from state-backed funds aimed at preventing the benchmark from ending below that level.

Testing patience

“The market is slowly searching for a bottom and testing investors’ patience,” said Wu Kan, a fund manager at JK Life Insurance in Shanghai. “Stocks are fluctuating in a small range near 2 800 amid waning turnover, as investors cautiously await clarity over issues such as the timing of US rate hikes.”

The Shanghai Composite fell 0.2% this week to 2 821.05. The index has dropped 4 percent this month, extending this year’s slide to 20% for the worst performance among 93 global indices tracked by Bloomberg.

Industrial companies’ profit growth slowed from 11.1% in March. For the January to April period, profits rose 6.5% from the previous year, the National Bureau of Statistics said on its website.

equities  |  markets  |  china stocks
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