China’s stocks fell yesterday, dragging the benchmark index down to the lowest level since March 2009, after an index of leading indicators signaled a slowdown in the world’s second-largest economy.
Anhui Conch Cement Co (安徽海螺水泥) led declines for industrial companies after the Conference Board’s leading index fell in October.
Poly Real Estate Group Co (保利地產), China’s second-largest developer by market value, dropped 2.1 percent after the government affirmed it would maintain a campaign to curb property prices following an annual economic conference that sets the policy tone for next year.
The Shanghai Composite Index dropped 20.07 points, or 0.9 percent, to 2,228.53 at the close, the lowest level since March 2009 and a fifth straight day of declines. The CSI 300 Index fell 1 percent to 2,397.48.
The leading index declined 0.1 percent to 160.1 in October, the Conference Board said yesterday in a statement, citing a preliminary reading.
The gauge captures prospects for the next six months, the New York-based research organization said. In September, it rose 0.4 percent.
“The risk of a more substantive slowdown in China’s economic growth than anticipated so far is rising,” Andrew Polk, an economist at the Conference Board, said in the statement.
“Targeted loosening of credit markets” should give some help to companies, “but the pass through from previous policy tightening measures will continue to act as a brake on the economy,” he said.
China’s expansion slowed to 9.1 percent in the third quarter, the least in two years, after the government raised interest rates, tightened credit and expanded property-market curbs.
Housing transactions declined in 27 out of 35 cities last week, according to Soufun Holdings Ltd (搜房網), the operator of the nation’s biggest real-estate Web site.
China’s economy will grow 8.5 percent next year, the least in 11 years and down from 10.4 percent last year, according to the Organisation for Economic Co-operation and Development (OECD).
The Conference Board leading index’s components include loans, raw-material supplies, export orders, consumer expectations and floor space started, from data released by the central bank and the statistics bureau.
First published in May last year, the gauge has successfully signaled turning points in China’s economic cycle if plotted back to 1986, according to the Conference Board.
Meanwhile, China’s leaders affirmed they would stick next year with a campaign to bring down property prices even as a “very grim” global outlook threatens growth in the second-largest economy.
The nation would target “basically stable” consumer prices and “unswervingly” implement real--estate curbs, according to a statement after an annual economic planning meeting in Beijing.
At the same time, officials would seek “steady and relatively fast growth,” Xinhua news agency said.
“The authorities are cautious about a premature or aggressive easing of policy, while committed to be pre-emptive and flexible to roll out supportive policies if needed,” said Chang Jian (常建), a Hong Kong-based economist at Barclays Capital, who formerly worked for the World Bank. “The policy focus will be shifting from managing inflation to supporting growth.”
Yesterday’s statement did not include wording from last year, that stabilizing prices would take a “more prominent position” in policies.