Markets

Equities decline as growth concerns mount-June 28

By Zhang Shidong (China Daily)
Updated: 2010-06-29 09:45

SHANGHAI - Mainland equities declined for a fourth day, sending the benchmark index to its longest losing streak in two months, on concern a stronger yuan and flooding in the southern region will slow economic growth.

"There is uncertainty over economic growth this year as domestic and overseas demand may be hurt by tightening measures and exchange-rate policies," said Wang Zheng, a fund manager at Jingxi Investment Management Co in Shanghai. "I am cautious about the outlook for the stock market."

The Shanghai Composite Index slipped 17.54, or 0.7 percent, to 2535.28 at the close, the longest losing streak since the six days ended April 29. The CSI 300 Index lost 0.7 percent to 2716.78.

The Shanghai gauge gained 1.6 percent last week after the central bank said it will increase the flexibility of the nation's exchange rate. It has dropped 18 percent in the second quarter, adding to a 23 percent decline this year, on concern government measures to rein in housing prices and the European debt crisis will damp economic growth.

China's pledge for a more flexible yuan will slow the nation's exports this year, adding to difficulties that include the European debt crisis and rising costs, an official with the Ministry of Commerce said.

Related readings:  Mainland, HK equities rally  Chinese equities close slightly higher Tuesday   ICBC Credit Suisse to tap China's demand for overseas equities

The yuan gained 0.5 percent last week, the most since December 2008. China indicated on June 19 that it was scrapping the yuan's peg to the dollar.

"External demand is still fragile and a stronger yuan may slow exports in the second half," said Zhang Qi, an analyst at Haitong Securities Co in Shanghai.

Floods in the southern region have caused an estimated economic loss of about 83.8 billion yuan ($12.3 billion) in 2010 and have displaced 4.66 million people, the Ministry of Water Resources said.

Hang Seng gains

Hong Kong stocks rose for the first time in three days, led by developers and oil producers. The Hang Seng Index rose 0.2 percent to close at 20726.68, halting a two-day, 0.8 percent drop. The Hang Seng China Enterprises Index was little changed at 11856.55.

Bloomberg News