China Copper Shares Drop on Concern Inflation

Chin copper producers declined on concern the central bank’s measures to tame inflation may slow the economy.

Jiangxi Copper Co. slid to the lowest in a month as metal prices dropped after the central bank ordered banks to set aside more cash for a third time this year to slow consumer price gains.

The reserve-requirement move shows we are still in the midst of tightening and that’ll continue to hold back valuations of the overall market,” said Wu Kan, a fund manager at Dazhong Insurance Co., which oversees $285 million. “But I don’t see a big decline from the current level as valuations are very close to the historical bottom.”

The Shanghai Composite has gained 3.4 percent this year on optimism the world’s second-biggest economy will withstand tighter monetary policies. Manufacturing expanded in January even after the central bank raised interest rates three times since the start of last year to cool inflation.

he People’s Bank of China said March 18 after the market close that banks’ reserve requirements will increase half a percentage point, the third such increase this year to cool lending. The ratio will rise to 20 percent for the nation’s biggest banks, excluding any extra limits for individual lenders.

Jiangxi Copper slid 1 percent to 38.85 yuan. Yunnan Copper Industry Co. lost 0.8 percent to 25.21 yuan. Copper for June- delivery on the Shanghai Futures Exchange fell as much as 0.7 percent to 71,310 yuan ($10,863) a metric ton, and traded at 71,490 yuan at 9:43 a.m. Singapore time.