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China Stocks Fall 12% From Their Highs as Downgrade by $JPM is Cited Over Slow Growth and Higher Inflation

“China’s stocks fell, dragging the Hang Seng China Enterprises Index (HSCEI) down 12 percent from this year’s high, as slowing growth and faster inflation spurred JPMorgan Chase & Co. to downgrade the nation’s shares.

The Hang Seng China index slumped 2.1 percent to close at a three-month low of 10,794.70. The Shanghai Composite Index (SHCOMP) declined 1.7 percent to 2,240.02 and the CSI 300 Index lost 1.5 percent to 2,502.49. JPMorgan cut China to underweight and recommended bearish derivatives tied to the country’s four biggest banks, Adrian Mowat, its chief Asia and emerging-market strategist, wrote in a report today…..

“Investors are concerned about the possibility of slowing growth and monetary tightening,” said Wu Kan, a Shanghai-based fund manager at Dazhong Insurance Co., which oversees $285 million. “The departure of Guo is perceived as negative for the market as he’s reform-minded and pushed forward innovative measures for the brokerage sector and the stock market.”

The measure of 40 Chinese stocks traded in Hong Kongentered a so-called correction after falling more than 10 percent since Feb. 1. The gauge has lost 5.6 percent this year, compared with a 5.8 percent advance by the MSCI All-Country World Index, and trades at 8 times earnings for the next 12 months, less than its five-year average of 10.3, according to data compiled by Bloomberg.

‘Nasty Combination’…”

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