Markets
Coal producers fuel rise in stocks - Aug 26
By Zhang Shidong (China Daily)
Updated: 2010-08-27 09:10
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SHANGHAI - Mainland stocks rose, as coal producers advanced on the prospect of mergers while companies from China COSCO Holdings Co to Jiangxi Copper Co climbed after reporting higher earnings.
China Shenhua Energy Co gained 0.5 percent after Premier Wen Jiabao called for accelerated consolidation of the coal-mining industry. China Cosco, the world's largest operator of dry-bulk ships, and Jiangxi Copper, the nation's biggest producer of the metal, rallied at least 1.2 percent. China Life Insurance Co sank the most in six weeks, limiting gains, after Citigroup Inc said the company's profits were "weak".
"Investors will buy on dips," said Wu Kan, Shanghai-based fund manager at Dazhong Insurance Co, which oversees $285 million. "Companies are reporting good earnings and the government probably won't intensify policy tightening. We are still in a range-bound pattern."
The Shanghai Composite Index rose 6.90, or 0.3 percent, to 2603.48 on Thursday. The gauge lost 2 percent on Wednesday on signs the global recovery is faltering. The CSI 300 Index added 0.3 percent to 2850.09.
The Shanghai gauge has rebounded 10 percent from this year's low on July 5 as investors speculated the government would ease restrictions on the real estate sector and allow more lending to counter a weaker economy. That has pared this year's loss to 21 percent, after the government increased down-payment requirements on home sales and ordered banks to set aside more deposits as reserves.
Premier Wen called for accelerated consolidation of the country's coal-mining industry at a State Council work conference on Wednesday, the central government said on its website on Thursday. Wen also called for the faster development of the river-shipping industry, the government said.
"The market is actively reacting to the call from the top management, which will benefit the coal industry in the long term," Wu Jie, a coal analyst at Orient Securities Co in Shanghai. A measure of energy-related stocks gained 0.9 percent, the second-biggest advance among the 10 industry groups on the CSI 300 on Thursday.
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"China Life remains our least preferred play in the sector due to its lackluster life operating trends, lack of property and casualty exposure and less gearing to a potential A-share market recovery than peers," Lam and Zeng wrote in a note to clients on Thursday.
Hang Seng declines
Hong Kong's benchmark stock index fell for a fifth day, completing its longest losing streak in more than three months after Citigroup Inc said China Life Insurance Co's first-half profit was "weak", and Hengdeli Holdings Ltd slumped after announcing a share sale.
The Hang Seng Index slipped 0.1 percent to 20612.06 on Thursday. The Hang Seng China Enterprises Index of H shares of mainland companies declined 0.5 percent to 11436.22 on Thursday.
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