STOCK MARKET WATCH -- Thursday, 27 December 2012

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24. China Stocks Drop as Valuation Concerns Overshadow Profit

http://www.bloomberg.com/news/2012-12-27/china-s-stock-index-futures-rise-before-industrial-profit-report.html

China’s stocks fell on concern a rally this month that lifted the benchmark index from a three- year low was excessive, overshadowing growth in industrial companies’ profits.

Anhui Conch Cement Co. (600585) led declines for materials producers, slumping 2.9 percent. Shaanxi Qinling Cement Co. tumbled 6.1 percent, trimming its gain since the Shanghai Composite hit this year’s low on Dec. 3 to 91 percent. Industrial & Commercial Bank of China Ltd. paces losses for financial companies, the worst performer among industry groups in the CSI 300 Index, on speculation banks are hoarding cash to meet year-end capital requirements.

“The market has risen too fast and ahead of economic fundamentals,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “The index will probably peak in January. Earnings for listed companies won’t have explosive growth next year.”

The Shanghai Composite Index (SHCOMP) slid 0.6 percent to 2,205.90 at the close. The measure rose as much as 0.7 percent after a report showed industrial companies’ profits climbed for a third month in November. The index has risen 13 percent since this year’s closing low of 1,959.77 on Dec. 3 as the nation’s new leaders said they would promote urban development as part of economic reforms.