Dec. 20 (Bloomberg) -- China’s stocks fell, pushing down the benchmark index for a fourth day, on concern drugmakers’ earnings may decline and that recent gains for consumer staples producers may be excessive.
Kangmei Pharmaceutical Co. led a retreat among health-care companies after the Economic Observer said the government may cut medicine prices by 40 percent. Kweichow Moutai Co., a liquor maker, fell 2 percent, narrowing its gain over the past month to 14 percent. Jiangxi Copper Co. and Yanzhou Coal Mining Co. climbed after commodity prices advanced.
"Investors tend to be cautious as we approach the year end," said Zhang Kun, a strategist at Guotai Junan Securities Co. in Shanghai "The interest-rate concerns are still there. It just might not happen immediately."
The Shanghai Composite Index, which tracks the bigger of China’s stock exchanges, slid 7.5 points, or 0.3 percent, to 2,886.19 at 10:33 a.m. The CSI 300 Index lost 0.2 percent to 3,220.65.
The Shanghai Composite, the worst performer among major Asian benchmarks this year, has fallen 7.7 percent since reaching an almost seven-month high on Nov. 8, on concern that monetary tightening will curb economic growth. The gauge has lost 12 percent this year.
Central Bank Governor Zhou Xiaochuan said the government will take stock moves into consideration when making policies.
"We are trying our best in making policy decisions to take the stock market reaction into account," China Central Television reported on Dec. 18, citing Zhou. "But when you only have a limited number of policy tools, you can hardly cover all the bases."
Drugmakers Fall
China increased interest rates in October for the first time since 2007 as inflation reached 4.4 percent on an annual basis, the highest since September 2008. Since then, the central bank has raised reserve requirements for lenders three times in five weeks. The last increase was on Dec. 10.
The National Development and Reform Commission may cut drug prices by an average 40 percent for 658 different items for the fourth time since 2009, the Economic Observer reported today, citing unidentified drug company officials.
A gauge of healthcare stocks fell 1 percent today, the second most among the 10 industry groups of the CSI 300.
Kangmei Pharmaceutical lost 2.1 percent to 21.72 yuan. Beijing Tiantan Biological Products Corp. retreated 1.7 percent to 23.48 yuan while North China Pharmaceutical Co. dropped 1.2 percent to 16.69 yuan.
A measure of consumer staples in the CSI 300 fell 1.5 percent, trimming gains over the past three months to 16 percent. The CSI 300 has risen 13 percent over the same period.
Kweichow Moutai slid 2 percent to 200.30 yuan. Rival Wuliangye Yibin Co. plunged 3.2 percent to 36.95 yuan today.
U.S. Economy
Jiangxi Copper led gains for metal producers, rising 1.1 percent to 40.89 yuan. Copper advanced for a second day from London to Shanghai, leading an advance in industrial metals.
Yanzhou Coal advanced 1 percent to 29.42 yuan.
The U.S. economy expanded 2.8 percent in the third quarter from a year earlier, quicker than the 2.5 percent estimate published last month, the Commerce Department will say Dec. 22, according to a Bloomberg News survey of economists.
China’s stocks may rise until the Chinese New Year as inflation is likely to ease "significantly" in December because of decreases in vegetable prices, according to China International Capital Corp.
Investment and export-related stocks will outperform the market, CICC analysts including Hou Zhenhai wrote in a note today. Monetary policies will continue to be loose in 2011, governments at the central and local levels are reluctant to slow investment at the start to the year and U.S. economic growth may exceed estimates, according to the report.
