BEIJING: China’s stocks dropped for the first time in three days after producers prices tumbled the most in six years.
The Shanghai Composite Index slid 1.1 percent to 3,206.16 at 9:35 a.m. local time, snapping a 5.3 percent, two-day advance. About 10 stocks fell for each that rose. The producer-price index declined 5.9 percent in August, extending declines to 42 straight months, while consumer prices increased 2 percent, the fastest pace in a year.
Factory deflation is pushing up real borrowing costs for the industrial sector, compounding challenges as the growth outlook dims. The Shanghai Composite has tumbled 39 percent from its June high to erase $5 trillion in value on mainland bourses as leveraged investors fled amid signs of a deepening slowdown in the economy.
The Hang Seng Index slumped 2.3 percent in Hong Kong, with the Hang Seng China Enterprises Index retreated 2.7 percent. The CSI 300 Index fell 1.1 percent, led by technology and industrial companies.
China’s campaign to end the equity rout is driving investors away from the brokerage industry. Instead of benefiting from government efforts to shore up the market, the Hong Kong-listed shares of Citic Securities Co., Haitong Securities Co. and China Galaxy Securities Co. have tumbled twice as fast as benchmark indexes since the beginning of July. Not only are brokerages being compelled to foot a portion of the rescue bill, they’re also getting hit by a plunge in volumes as policy makers restrict speculative trading.
