Asian commodity-linked stocks slide as China pushes prices down

(Bloomberg) – Commodity-related companies led Asian equities lower for a second day amid growing global concerns about inflation and the Chinese government’s rumblings over rising materials prices.

Australian miner BHP Group Ltd. and Korean steelmaker Posco were among the biggest drag on the MSCI Asia Pacific index on Thursday. Energy fell the most among the 11 regional benchmark industrial groups, with stocks such as PetroChina Co. and Yanzhou Coal Mining Co. falling 5% to 10%.

Metal prices fell in overnight sessions on Chinese stock exchanges, with iron ore falling 6.5% and coking coal 7.5%. Oil futures have stabilized after slipping around 3% on Wednesday on fears of inflation as well as hopes of a new Iran nuclear deal.

The rapid slowdown comes just weeks after major investment banks and trading firms, including Goldman Sachs Group Inc., Citigroup Inc. and Trafigura Group, boldly predicted the start of a new era of commodities markets. booming.

Even with the recent declines, materials stocks are still the biggest winners on the key Asian stock index this year, up more than 9%, with energy stocks at No.3 with a gain. by 6%. Hopes of an economic reopening had pushed economically sensitive stocks and commodities higher until price concerns revived last week.

The Chinese government helped pour cold water into these rallies this week. The supply of basic commodities must be ensured and efforts must be made to prevent the rise in prices from being passed on to consumers, state broadcaster CCTV reported on Wednesday, citing a meeting of the State Council chaired by the Prime Minister. Minister Li Keqiang.

“Commodity inflation has prompted China to significantly slow credit growth this year and implement non-monetary measures aimed at slowing the growth of construction investment, one of the main drivers of demand for materials, ”KeyBanc Capital Markets analysts headed by Philip Gibbs wrote in a note. “Traditionally, this has been a bearish signal for commodity stocks.”

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