BEIJING: China’s stocks headed for their biggest three-day loss in a month on concern a world-beating rally has gone too far, too fast.
The Shanghai Composite Index slumped 1.3 percent to 4,825.74 at the 11:30 a.m. local-time break, extending a two-day, 5.4 percent decline. Consumer, industrial and health-care companies led losses Wednesday. Shanghai Electric Group Co. tumbled 6.7 percent, the second-biggest contributor to declines and paring its gain this year to 134 percent.
A growing number of analysts are predicting the stock market is a bubble that will burst as valuations reached levels that by some measures exceed the peak of China’s last equity mania in 2007. Equities also declined on concern investors were pulling funds to partake in new share sales. Guotai Junan Securities Co. plans to raise as much as $4.85 billion this week in the mainland’s biggest initial share sale since 2010.
“Shares have risen to pretty expensive levels and some investors are choosing to sell,” said Dai Ming, a Shanghai-based fund manager at Hengsheng Asset Management Co. “The speed of new share sales is fast and accelerating now. The market needs a correction at this level.”
The CSI 300 Index declined 1.2 percent. Hong Kong’s Hang Seng China Enterprises Index added 0.2 percent at the noon break, led by a rally for Bank of Communications Ltd. The Hang Seng Index rose 0.3 percent.
The Shanghai Composite has jumped 134 percent in the past 12 months through Tuesday, the most among benchmark global indexes tracked by Bloomberg, as novice investors piled into stocks on bets gains will continue. Record margin debt has fueled the advance.
