The Shanghai Composite Index (SHCOMP) headed for its biggest quarterly loss since June before tomorrow’s manufacturing report. The measure fluctuated today as gains for consumer-staples companies offset losses for financial shares.

Kweichow Moutai Co., the biggest liquor maker, rallied 1.7 percent, halting a five-day slide. Consumer-staples producers climbed the most among industry groups. Zhejiang Dian Diagnostics Co. surged 8.6 percent after the Economic Information Daily reported the government will soon release new rules on the medical-equipment industry. China Minsheng Bank Corp. dropped more than 2 percent in Shanghai and Hong Kong. Poly Real Estate Group Co. slumped 2.5 percent.

The Shanghai Composite dropped 0.1 percent to 2,040.59 at 1:06 p.m. local time. The measure has lost 0.8 percent this month, extending this quarter’s slump to 3.6 percent, after a private developer collapsed and concern grew the restart of initial public offerings will divert funds.

“It’s a tough market to be in now,” said Mao Sheng, an analyst for Huaxi Securities Co. in Chengdu. “Investors are waiting for March data and future policy plans are unclear. Investors want to know what the government is going to do.”

The CSI 300 Index rose 0.1 percent to 2,153.21 today, paring this quarter’s loss to 7.6 percent. The Hang Seng China Enterprises Index (HSCEI) advanced 0.3 percent, extending this month’s gain to 1.4 percent. The H-shares index trades at 6.7 times estimated earnings, compared with 7.5 for the Shanghai Composite. Trading volumes in the Shanghai index were 16 percent below the 30-day average for this time of day, according to data compiled by Bloomberg.

Economic Data

China’s official manufacturing Purchasing Managers’ Index probably dropped to 50.1 in March from 50.2 in February, an eight-month low, according to the median estimate of 33 economists surveyed by Bloomberg. A number above 50 signals expansion. The National Bureau of Statistics and China Federation of Logistics and Purchasing are scheduled to announce the data tomorrow.

A preliminary reading of manufacturing released by HSBC Holdings Plc and Markit Economics on March 24 unexpectedly fell, triggering speculation the government will take further steps to bolster the economy. Barclays Plc said last week the government may announce investment projects and reforms of state-owned companies as the slowdown in manufacturing threatens Premier Li Keqiang’s 7.5 percent economic growth target for this year.

“Investors will be very cautious in trading as they are afraid the data will disappoint,” Zhang Yanbing, an analyst at Zheshang Securities Co., said in Shanghai. “There’s PMI tomorrow and more March data coming.”

Consumer Staples

A gauge of consumer-staples producers in the CSI 300 rose 1.4 percent. Moutai, the biggest producer of baijiu liquor, added 1.7 percent to 155.30 yuan. Dairy producer Inner Mongolia Yili Industrial Group Co. climbed 2.1 percent to 35.76 yuan.

Zhejiang Dian Diagnostics, which provides medical diagnostic solutions to hospitals, surged 8.6 percent to 79 yuan. China will soon release new rules on the medical equipment industry to monitor and regulate products with high risks, the Economic Information Daily reported.

A measure of financial companies in the CSI 300 dropped 0.4 percent, the worst performance among the 10 groups. Minsheng Bank fell 2.7 percent in Shanghai and 2.4 percent in Hong Kong after its full-year net income of 42.3 billion yuan ($6.8 billion) trailed the Bloomberg estimate of 41.9 billion yuan. CIMB Securities HK Ltd. downgraded the shares to reduce. Bank of Communications Co. declined 1.1 percent to 3.78 yuan after it reported a full-year profit of 62.3 billion yuan.

IPO Outlook

New share listings may resume from next month, the China Daily reported last week, citing unidentified people familiar with the matter. The China Securities Regulatory Commission halted new share approvals in January after restarting them following a more than a one-year suspension.

China’s IPOs are vastly outperforming IPOs in the U.S. and Europe so far this year. The 48 companies that completed IPOs in 2014 have surged an average 54 percent to date when adjusted for deal size, compared with a 9 percent gain for 194 first-time sales outside China, according to data compiled by Bloomberg.

That performance owes much to efforts by China’s securities regulator to protect small investors in an initial offering process that had been riddled with fraudulent practices. Facing pressure from the watchdog, most companies that went public this year did so at below-average valuations as they rushed to raise money following a 15-month IPO freeze.

Poly Real Estate, the second-biggest developer, slid 2.5 percent to 7.52 yuan. China Vanke Co., the largest, retreated 0.9 percent to 8.05 yuan in Shenzhen.

Property Defaults

Zhejiang Xingrun Real Estate Co., a private developer which became insolvent this month with 3.5 billion yuan ($563 million) in debt, may portend difficult times ahead for small developers. China has almost 90,000 of them nationwide, National Bureau of Statistics data show. As new-home price growth slows in China and cash-flow conditions tighten, more local builders like Xingrun will face defaults, Fitch Ratings Ltd. Hong Kong-based analyst Andy Chang wrote in a March 19 report.

To contact the reporter on this story: Weiyi Lim in Singapore at wlim26@bloomberg.net

To contact the editors responsible for this story: Michael Patterson at mpatterson10@bloomberg.netAllen Wan, Richard Frost