BEIJING: China’s stocks fell, sending the benchmark index toward its biggest two-day loss this month, on concern valuations are outstripping earnings growth and a flood of share sales will lure funds from existing equities.
Technology, phone and industrial companies, the best performers this year, led declines. Shenzhen O-film Tech Co., CRRC Corp. and ZTE Corp. slumped at least 2.9 percent. Huayi Brothers Media Corp. slid 1.4 percent in the ChiNext, paring gains over the past year to 120 percent.
The Shanghai Composite Index fell 1.3 percent to 4,995.28 at the 11:30 a.m. break, extending losses to 3.3 percent in the past two days. The gauge is trading at the highest level since December 2009 after a 145 percent surge in the past year. Investors are raising funds to bid for initial public offerings that jumped 44 percent on average during the first day of trade.
“Investors are pretty sensitive at this level with the index having run up a lot,” said Wu Kan, a Shanghai-based fund manager at Dragon Life Insurance Co., which oversees about $3.3 billion. “Once there’s negative news such as liquidity, they tend to sell first. It also looks like investors are now dumping growth stocks.”
