Chinese stocks, the world's worst performers this month, extended declines yesterday after Premier Wen Jiabao said the economy faces many "uncertainties" and China Construction Bank Corp warned of asset bubbles.
Aluminum Corp of China Ltd slid 2.9 percent after it posted a third quarter loss, and Wen said a "decline in external demand may continue for a longer time" while excess production capacity may restrain industrial growth, according to a statement posted on the government website after the market closed on Monday. China Construction Bank Corp sank 4.3 percent after Chairman Guo Shuqing said "there's definitely a bubble in the stock market as well as the property market".
The Shanghai Composite Index, which tracks the larger of China's stock exchanges, fell 77.63, or 2.6 percent, to 2,915.80 at close yesterday, the biggest loss since Aug 19. It has dropped 15 percent this month on speculation economic growth will falter and the government will curb new lending.
"Investors had been expecting corporate earnings to improve from the very start of the year, but that seems not to have materialized," said Zhang Ling, who helps oversee about $7.21 billion at ICBC Credit Suisse Asset Management Co in Beijing. "It looks like there won't be any catalyst for corporate earnings going forward."
The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, declined 3.7 percent to 3,109.83.
China will keep its "macroeconomic adjustment measures", such as stimulating domestic demand, maintaining market liquidity, reviving enterprises, promoting innovation and improving social security, Wen was quoted as saying. Authorities can't be "blindly" optimistic, he said.