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By Bloomberg

Most Chinese stocks fell amid concern recent gains have been excessive as new share offerings may divert funds from existing equities.

Citic Securities Co. and China Merchants Securities Co. led declines for brokerages with losses of more than 2 percent after more than doubling over the past month. The ChiNext index of smaller companies dropped 3.1 percent as money-market rates rose on the biggest initial public offering sales this year. BYD Co. rebounded 20 percent in Hong Kong after the electric carmaker said it confirmed with shareholder Berkshire Hathaway Inc. that it has no intention to reduce its stake.

About three stocks dropped for each that rose on the Shanghai Composite Index. The measure rose 0.5 percent to 3,071.39 at 1:48 p.m., extending this week’s gain to 4.6 percent. The CSI 300 Index slipped 0.1 percent. Guosen Securities Co. and 11 other companies started to market IPO shares this week, which may lock up to 3 trillion yuan ($483 billion), according to Shenyin & Wanguo Securities Co.

“Most of IPOs are smaller companies so increasing the stock supply isn’t good for small caps,” said Dai Ming, a fund manager at Hengsheng Asset Management Co. in Shanghai. “As the market rises, stocks could be volatile as any news flow will trigger profit taking.”

Hong Kong’s Hang Seng China Enterprises Index advanced 0.6 percent, while the Hang Seng Index gained 1.3 percent. The Bloomberg China-US Equity Index added 0.8 percent yesterday.

The Shanghai Composite has climbed 45 percent this year amid speculation the central bank will reduce reserve- requirement ratios after cutting interest rates for the first time in two years last month. It’s valued at 11.5 times 12-month projected earnings, the highest in three years, according to data compiled by Bloomberg. Trading volumes were 29 percent higher than the 30-day average for this time of day.

RSI Jumps

The 14-day relative strength measure for the index, measuring how rapidly prices have advanced or dropped during a specified time period, was at 74.7 yesterday, higher than 70 for an eighth day. Readings above 70 indicate a price may be poised to fall.

Smaller companies led the decline today. Huayi Brothers Media Corp., China’s biggest listed film maker, slid 4.2 percent, extending losses to 9.1 percent this week. Shanghai Kingstar Winning Software Co. slumped 8.4 percent.

The benchmark seven-day repurchase rate, a gauge of interbank funding availability in the banking system, climbed 63 basis points, or 0.63 percentage points, to 5.91 percent in Shanghai, according to a weighted average compiled by the National Interbank Funding Center. That’s the highest level since January.

BYD Gains

The People’s Bank of China extended short-term loans to commercial banks yesterday, said people familiar with the matter, as the central bank sought to boost liquidity with investors hoarding cash ahead of a series of share sales. The amount of the loans given to commercial banks wasn’t clear, according to the people, who asked not to be named because the move wasn’t made public.

BYD, whose shares tumbled a record 29 percent yesterday in Hong Kong, reiterated comments that its operations are normal and that it has no substantial foreign exchange losses tied to its Russia business, according to a filing to the Hong Kong stock exchange. The level of support from the Chinese government for new-energy vehicles also hasn’t changed substantially, it said. The shares rose 3.1 percent in Shenzhen.

Aluminum Corp. of China Ltd., the nation’s biggest producer, jumped by the 10 percent daily limit. The biggest Chinese aluminum producer will sell stakes in four solar product units in Ningxia province through a public tender, according to a company statement. Chalco also said Xiong Weiping has resigned as chairman due to “work changes.”

Transport companies rallied. China Southern Airlines Co. gained 6.7 percent, while Cosco Shipping Co. surged 10 percent. Crude oil dropped to the lowest level in more than five years on concern a supply glut will worsen. West Texas Intermediate for January delivery fell 4.2 percent to $54.11 a barrel in New York yesterday.