A woman leaves a McDonald's outlet in Beijing. McDonald's Corp said on Wednesday that it has raised menu prices on the Chinese mainland due to the effects of rising material costs. [Photo/Aagencies]
Chongqing Brewery Co plunges by 10 percent limit, PetroChina slides
SHANGHAI - China's stocks fell for a second day, sending the benchmark index into a correction.
Chongqing Brewery Co, partly owned by Carlsberg A/S, plunged by the 10 percent limit on concern the government will prevent companies from passing on rising costs to consumers.
Jiangxi Copper Co and PetroChina Co slid at least 1.9 percent on a worsening outlook for metal and energy demand after commodities capped the biggest five-day slide in a year.
"The market is worried that future measures to tighten monetary policy will be more severe," said Luwu Mei, vice-director of research at Lion Fund Management Co, which oversees about $7.5 billion. "Investors should adopt a more conservative approach given the current market sentiment."
The Shanghai Composite Index dropped 1.92 percent to 2838.86 at the 3 pm close on Wednesday, the lowest level in a month. The gauge has lost 10 percent since reaching an almost seven-month high on Nov 8 as investors speculated the government will raise rates for the second time in a month and institute price controls to combat the fastest inflation in two years. The CSI 300 Index retreated 2.07 percent to 3103.91 on Wednesday.
A gauge of consumer staples in the CSI 300 slid 5.4 percent, the most since August 2009.
Chongqing Brewery, the best performer this year after tripling its stock price, fell 10 percent on Wednesday.
Wuliangye Yibin Co, a spirits maker, dropped 3.9 percent on Wednesday.
Nomura Holdings Inc is turning "bearish" on China's yuan-denominated shares, saying that the government may introduce price controls to curb accelerating inflation.
Commodities capped the biggest five-session slide since July 2009 on concern that China will seek to slow its economic growth, curbing raw-material demand in the country that is leading the global recovery. Copper, sugar and rubber futures slumped to their daily limit in China, with copper set for its biggest four-day slide since 2008.
Jiangxi Copper lost 2.9 percent on Wednesday. Yanzhou Coal Mining Co and PetroChina dropped 1.9 percent on Wednesday.
The central bank may raise rates due to sustained inflationary pressure, the China Securities Journal said in Wednesday's edition. China may increase borrowing costs for a second time this year as soon as Friday, the newspaper said, citing an unidentified analyst. Nanning Sugar dropped 4.4 percent on Wednesday, the lowest since Oct 8. Guangxi Guitang, a producer of cane sugar, fell 5.6 percent on Wednesday.
Big jet takes off with 100 order"Healthcare stocks have risen too much," said Li Ying, an analyst at CSC Securities HK Ltd in Shanghai. The index tracking drugmakers has gained 37 percent since July 1, compared with a 23 percent gain in the CSI 300 Index. Kangmei Pharmaceutical Co slumped 8.4 percent on Wednesday.
A gauge of property developers in the Shanghai Composite rose 0.7 percent on Wednesday.
China is unlikely to introduce further property-specific measures as the government shifts its policy focus to controlling inflation, according to a report by Citigroup analysts including Oscar Choi.
The brokerage reiterated its "overweight" recommendation on property stocks, saying that current share prices have factored in "much of the bad news". Poly Real Estate Group Co added 0.6 percent on Wednesday.
Bloomberg News
