Mainland equities decline, liquor shares up on earnings

Stock markets in Shanghai and Shenzhen took a dive Monday as China's Consumer Price Index (CPI), a major gauge of inflation, grew by an annual rate of just below 2 percent in September.

The Shanghai Composite Index declined 6.23 points, or 0.30 percent, to close at 2,098.70; while the Shenzhen Component Index slumped 0.33 percent, or 28.23 points, to finish at 8,621.97.

Both indices got a slight nudge upward after the markets opened but quickly retreated on contractions in the heavily weighted non-ferrous metal, machinery, shipping and auto sectors. The downward trend carried into afternoon trading, although late day gains helped moderate losses.

Brewing, 3D printing, gas, medicine and geothermal energy stocks recorded some of Monday's largest gains; while the media, gold, rare earth and engineering machinery sectors ranked among the day's worst performers.

While China's CPI increased by just 1.9 percent year-on-year in September, down from 2 percent in August, according to information released Monday by the National Bureau of Statistics, analysts say that many investors are worried that inflationary pressures will pick up in the fourth quarter and prevent the central bank from introducing further easing policies which may have helped the A share market.

Third quarter profit warnings from several prominent mainland-listed firms were also blamed for the day's tumble.

Shanghai-listed ZTE Corporation dropped to the daily limit to end at 9.45 yuan ($1.50) after the company predicted that it would close the third quarter with a 1.75 billion yuan deficit.

Meanwhile, rosy forecasts helped Chinese liquor producers climb higher. Wuliangye Yibin Co Ltd said Sunday that it expects its profits to grow 85 percent year-on-year in the third quarter thanks to rising liquor prices. Wuliangye tacked on 3.90 percent to 34.67 yuan thanks to the news. Shenzhen-listed Anhui Gujing Distillery added 4.49 percent to 37.70 yuan after predicting a 50 to 60 percent net profit surge over the same period.

News we recommend: Let the train, take the strain Personal care market to keep growing An Apple a day isn't keeping critics away Global companies expand rapidly in China Shanghai's 'other' market China's tourism industry reaps golden harvest Commentary:Asking the right questions  More Investment, More Woes? All that glitters is gold