China’s Stocks Decline From Seven-Week High After Trade Data 

• Report shows imports extend longest losing streak in 6 years
• Investors returning to market as margin debt rebounds

China’s stocks fell from a seven-week high, dragged down by commodity producers, after imports fell by more than economists predicted.

The Shanghai Composite Index slipped 0.2 percent to 3,280.27 at 1:02 p.m. local time.PetroChina Co. and Jiangxi Copper Co. retreated at least 1.3 percent, pacing losses in energy and material producers. A trade report showed imports plunging 17.7 percent in September, an 11th straight decline, compared with an estimate for a 16.5 percent drop. Exports weakened less than forecast.

“The data are not good but still acceptable to investors,” said Wu Kan, a Shanghai-based fund manager at JK Life Insurance Co., who’s adding to holdings. “As long as the data remain sluggish, the market will be anticipating growth-boosting measures from the government.”

The CSI 300 Index lost 0.4 percent. Hong Kong’s Hang Seng China Enterprises Index fell 0.9 percent, while the Hang Seng Index dropped 0.5 percent.

Margin Debt

The Shanghai gauge rebounded 12 percent from an August low through Monday amid speculation policy makers will introduce more measures to boost growth and stabilize mainland markets. Besides speculation that China’s central bank will reduce interest rates or reserve-requirement ratios, the government announced over the weekend it will expand a relending trial to nine more cities and provinces, while Premier Li Keqiang said policy makers will increase fiscal support for shantytown redevelopment.

The stocks rebound has started to lure back investors, with trading volumes in Shanghai jumping to the highest level since Sept. 2 on Monday, while margin debt posted its biggest gain since December. Trading volumes were 8.6 percent above the 30-day average for this time of day on Tuesday.

Gauges of energy and raw-material producers fell at least 1.1 percent for the biggest declines among the industry groups of the CSI 300. China Coal Energy Co. lost 1.6 percent while Yunnan Chihong Zinc & Germanium Co. slid 3.7 percent, heading for the first decline in five days.

Import Slide

The drop in imports compared with the forecast for a 16.5 percent drop and the previous month’s 14.3 percent decrease, according to data from the customs administration on Tuesday. Overseas shipments fell 1.1 percent, compared with a 6.1 percent decline in August and the forecast for a 7.4 percent slide. The trade surplus was 376.2 billion yuan ($59.4 billion).

The import slide reflects the pressure China’s economic slowdown is having on global growth and this year’s plunge in commodity prices. On the export side, signs of stabilization suggest improved external demand and offers the first indication that the People’s Bank of China’s surprise devaluation of the yuan in August is giving a boost to competitiveness.

Inflation data are due Wednesday. Growth in consumer prices probably slowed to 1.8 percent, according to the Bloomberg survey. Data on third-quarter economic growth will be released next week.

The Communist Party of China Central Committee will hold a key meeting during Oct. 26-29 to deliberate on an economic and social development plan for China over the next five years, the Xinhua News Agency reported.

Source: Bloomberg – China’s Stocks Decline From Seven-Week High After Trade Data

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