Benchmark down for first time in four days

China's stocks fell on Tuesday, with the benchmark index dropping for the first time in four days, as smaller-than-estimated growth in personal incomes in the United States heightened concern the economic recovery may falter.

China Cosco Holdings Co and China Shipping Development Co slid at least 1.1 percent on concern a slowing economy will reduce transport demand. China Vanke Co and Poly Real Estate Group Co paced declines for property developers on speculation the government will boost housing supply to curb price increases.

"Weak external demand is a big factor that will hamper China's economic growth for the rest of the year," said Wu Kan, Shanghai-based fund manager at Dazhong Insurance Co, which oversees $285 million.

"It's negative for stocks as the government is struggling now to bolster domestic demand. It'll add uncertainty to the complicated economic scenario."

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, slipped 13.87, or 0.5 percent, to 2,638.80 at the 3 pm close. It added less than 0.1 percent this month after gaining 10 percent in July. The CSI 300 Index fell 0.4 percent to 2,903.19 on Tuesday.

The Shanghai gauge has rebounded 12 percent from this year's low on July 5 as investors speculated the government would ease monetary policy. That's pared this year's loss to 19 percent, after the government increased down payment requirements on home sales and ordered banks to set aside more deposits as reserves.

In the US, the Standard & Poor's 500 Index lost 1.5 percent on Monday after government data showed personal incomes climbed 0.2 percent in July, less than the 0.3 percent projected in a Bloomberg survey of economists.

Disposable incomes, or the money left over after taxes, dropped for the first time since January after adjusting for inflation. The US, the world's biggest economy, makes up about 20 percent of China's exports.

China Cosco, the world's largest operator of dry-bulk ships, fell 1.1 percent to 9.91 yuan ($1.46). China Shipping, a unit of China's second-biggest sea cargo group, lost 1.2 percent to 9.56 yuan.

A gauge of property stocks in the Shanghai Composite fell 0.4 percent. Vanke, the nation's biggest listed property developer, lost 0.7 percent to 8.42 yuan. Poly Real Estate, the second largest, dropped 0.9 percent to 12 yuan.

The country's property stocks are likely to lag the broader market as the government increases the supply of housing to curb price increases, Shi Bo, general manager of Shanghai Elegant, said in a phone interview. Harsher measures may be imposed if housing prices don't decline, he said.

The Shanghai Composite is little changed this month after jumping 10 percent in July. Consumer staple stocks are the best performers in August on the prospect that accelerating inflation will boost profit and as the government encourages domestic consumption to reduce the nation's reliance on exports and investment. Financial stocks are the laggards on concern banks' new share sales will divert funds from existing equities.

Source:China Daily