Money

Inflation concerns drive markets lower

By Zhang Shidong (China Daily)
Updated: 2011-03-03 10:39

Investors at a brokerage in Haikou, Hainan province. The Shanghai Composite Index lost 0.18 percent to close at 2913.81 on Wednesday, the biggest loss since Feb 22. [Photo / China Daily]

SHANGHAI - Stocks on the Chinese mainland fell on Wednesday, driving the benchmark index down by the most in a week. The retreat came on concern that inflation will accelerate as crude prices topped $100 a barrel.

Air China Ltd and China Southern Airlines Co declined on speculation that higher jet-fuel costs will hurt margins. China Vanke Co paced losses by developers after Xinhua News Agency said Beijing home sales tumbled last month. China Railway Construction Corp retreated 3.28 percent.

"Imported inflationary pressure is increasing in China now with oil prices surging," said Wei Wei, an analyst at West China Securities Co in Shanghai. "That will cause concerns the government will further tighten measures to curb inflation."

The Shanghai Composite Index lost 0.18 percent to 2913.81 at the 3 pm close on Wednesday, the biggest loss since Feb 22.

The CSI 300 Index declined 0.36 percent to 3243.30.

Air China lost 2.1 percent to 11.68 yuan ($1.78). China Southern sank 2.14 percent to 8.69 yuan. China Eastern Airlines Corp lost 1.51 percent to 6.51 yuan.

Related readings:  Shares extend gains as slowing home prices ease concerns over tightening  Malls witnessing gold rushas shoppers fear inflation  China's bonds are worst BRIC performers  Inflation may peak in second quarter

China Railway declined 3.28 percent to 7.08 yuan. The company said it has halted work on three construction contracts in Libya, which have a combined value of $4.24 billion, and has evacuated most of its workers.

"The impact on China Railway's earnings may be very negative this year," said Zhang Qi, a market analyst at Haitong Securities Co in Shanghai.

Vanke, the nation's biggest listed property developer, fell 1.2 percent to 8.20 yuan. Poly Real Estate Group Co retreated 1.09 percent to 12.66 yuan.

China Merchants Bank (CMB) Co advanced among lenders after Orient Securities Co said banking earnings may exceed estimates in the first quarter.

CMB rose 2.82 percent to 13.47 yuan. Shanghai Pudong Development Bank Co added 1.78 percent to 13.18 yuan. Bank of Nanjing Co climbed 1.61 percent to 10.70 yuan.

First-quarter profit for China's banks may increase 28 percent as the increases in interest rates boost net interest margins, Jin Lin, an analyst at Orient Securities, wrote in a report on Wednesday. CMB, Pudong Bank and Bank of Nanjing may report earnings growth of more than 40 percent in the first three months of the year, according to the report.

Changjiang Securities Co fell 3.18 percent to 13.11 yuan, the most since Feb 22. The brokerage said it will sell additional shares on Friday at a price of 12.67 yuan each. The company said in January that it won approval from the China Securities Regulatory Commission to sell as many as 600 million additional shares.

China Nonferrous Metal Industry's Foreign Engineering and Construction Co gained 2.2 percent to 31.16 yuan, the most in two weeks. The company said it signed has a contract worth 7.2 billion yuan to build an aluminum plant for an Iranian company.

Xinjiang Goldwind Science & Technology Co, the nation's biggest listed maker of wind turbines, slid 2.29 percent to 20.47 yuan, the most since Feb 18. Citigroup Inc's analysts cut the company's Hong Kong stock rating to "sell" from "buy" and reduced their profit estimates on rising competition and overcapacity.

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