April 22 (Bloomberg)--China stocks fell, driving the benchmark index to its weekly fall more within three months, the concern that the Central Bank will increase measures to cool inflation. The yuan has touched a high of 17.
Of Shanghai Composite index has lost to 3,010.52 at the local 3-time 0.5%. Aluminum Corp. of China Ltd., producer of the metal nation, declined by 1.5% after reporting lower profit on rising costs. China Vanke Co. and Agricultural Bank of China Ltd. to the pace of the declines by developers and banks. China Southern Airlines Co. Advanced between the airlines on a more strong yuan will be pare the value of the dollar-denominated debts of speculation.Yuan forwards exchanged the biggest premium to the spot rate, more than five months reflecting speculation, the Central Bank will allow more rapid currency gains helping tame inflation. Four of higher Bank reserve requirements and interest rate increases have failed so far curb prices, with the index in the consumer price rising from 5.4% in March. "" Investors are still waiting to see tightening measures more that inflation remains at a high level, "said Li Jun, a strategist at China Central Securities Co. in Shanghai. "An appreciation of the yuan faster would become part of Government efforts to curb inflation after the Central Bank gets close to a ceiling for the reserve requirement ratios and interest rate increases."Index Composite in Shanghai collapsed 1.3% this week, the largest decline since five days ended on January 21 and reduce advance annual tonnage of 7.2%. The CSI 300 Index, tracks a shares traded on both exchanges in the country, has lost 0.5% at 3,299.94 today. "Production and operations of the Difficulties companies ' large Chinese face inflationary pressures increase in prices of raw materials and imported products, the Ministry of industry and technology information said this week. The effects of rising prices cause "major difficulties" for local businesses, he said.Aluminum Corp. of China, known as Chalco, sank 1.5% at 11.17 yuan. Profit in the first quarter of the company fell 47% from a year ago, in 331 million Yuan (51 million dollars on higher contents) and fuel costs, according to a statement on the Shanghai Stock Exchange. Crude prices rose from 34% in the past year.Policy makers in China can use Exchange tools more frequently in the past to tame inflation, Ba Shusong, researcher at the State Council Development Research Center, said today in Shanghai. A "moderate" pace of appreciation of the yuan would be effective in dealing with imported inflation, he said.Yuan GainsThe of currency strengthened 0.4% this week to 6.5096 per dollar, its advance more important since mid-January, according to the system of exchange of China change. Currency gained 0.17% today and hit a maximum of 17 years of 6.5089, after the Central Bank set a reference rate 0.11% greater to 6.5156 Yuan every dollar, the highest level since yuan stronger July result lifted airlines and paper producers. China Southern rose from 2.4 to cent to 8.93 yuan. Air China Ltd., the largest international carrier, has added 1.5% to 11.66 yuan. Shandong Chenming Paper Holdings Ltd., the largest felt by the market value, rallied to 3.8 per cent to 8.72 yuan, its highest close since November 11. A rising yuan will reduce the cost of the pulp imported. "" Paper manufacturers and airlines will benefit the most of the appreciation of the yuan because of their dependence on imports, such as pasta and aircraft, "said Li Lei, an analyst with China Securities Co. in Beijing. "The yuan will be a big hand for companies this year."Overseas DebtA more strong yuan pares the value of the denominated debt built up by the Chinese airline to purchase Boeing Co. and aircraft Airbus SAS. Each 1% appreciation of the yuan will add 600 million yuan to pay for Air China, according to Rao Xinyu, head of investor relations, while southern China, said March 29 each 1 percent gain in the yuan adds 400 million yuan of earnings.The Chinese Government risk a "landing" for the economy by failing to tighten monetary policy quickly enough to cool inflation, according to independent Economist Andy Xie. The Central Bank may raise borrowing costs three or four times during the rest of the year, the former economist at Morgan Stanley said Bloomberg Television yesterday.China Vanke, the largest developer, fell to 1.5% 8.55 Yuan. Poly Real Estate Group Co. has decreased by 0.7% to be yuan. Agricultural Bank of China has lost 1.4 per cent to 2.88 yuan. Industrial and Commercial Bank of China Ltd., the biggest lender, slipped 0.9% to 4.54 yuan.Housing CurbsThe Government is committed to the property of the control of prices, people's daily reported today, citing Mu Hong, a vice director in the National development and the Government of the Commission.The reform China restricted purchases home and raised the payments down on the second mortgages to cap the price of real estate, which gained during 19 months to December and in March, climbed to 67 70 cities the Government monitors.Developers and Chinese banks are "undervalued" and may if extend gains as the Government contains inflation, said Wang Yawei, which manages the Fund lighthouse of larger society of mutual funds of the Chine.Les shares of the country may display "small gains" in the second quarter that earnings prospects remain "positive"Wang said in a quarterly report. "The inflationary factors in the short term will be effectively offset by Government tightening measures and stay under control.".-Irene Shen. Editors: Richard Frost, Allen Wan
To communicate with the staff of Bloomberg News for this story: Irene Shen in Shanghai at the ishen4@bloomberg.net
To contact the editor responsible for this story: Darren Boey to the dboey@bloomberg.net
