Profit-taking hits oil, power companies

Shanghai stocks slipped yesterday as profit-taking hit power producers and oil refiners, while China United Telecommunications pulled back after an initial surge on a restructuring announcement by its Hong Kong-listed affiliate, China Unicom.

The benchmark Shanghai Composite Index ended down 0.65 percent at 3436.398 points. Turnover in Shanghai A shares remained thin at 69.2 billion yuan, though it was up from Monday's 61.8 billion yuan.

SDIC Huajing Power dropped 2.32 percent to 10.14 yuan after surging its 10 percent daily limit on Monday. Top oil refiner Sinopec lost 1.62 percent to 13.4 yuan after gaining 11 percent over the previous four sessions.

Both shares had risen on speculation that the government would permit power producers and refiners to raise prices. So far there has been no clear sign that the government will do this, especially with inflation near an 11-year high.

China United Telecommunications, the most active stock in Shanghai, initially soared its 10 percent daily limit as it resumed trading after a week-long suspension due to its affiliate's restructuring. But it later pulled back to close down 1.54 percent at 9.6 yuan in its heaviest trade since May 2007.

The market is nervous about the approach of a big planned IPO by China State Construction Engineering Corp, which may be approved by the securities regulator tomorrow, increasing the supply of shares.

"The index lacks energy to rise. Given the pressure from the IPO, it's hard to think the market will be very strong in June," said Chen Jinren, analyst at Huatai Securities.

HK shares lower

Hong Kong shares closed 1.8 percent lower yesterday, snapping a three-day rally and hurt by losses in China telecom stocks after a long-awaited restructuring and reports that US bank Lehman may need to raise more capital.

Shares in China Unicom tumbled 14.1 percent to HK$15.88. China Netcom dropped 12.8 percent to HK$23.6 while China Telecom gave up 12.7 percent to HK$12.95.

Index heavyweight China Mobile, which was the most actively traded stock in Hong Kong yesterday, finished 2.2 percent lower to close at HK$115 after it gained in three consecutive sessions.

The Hang Seng Index closed 455.6 points lower at 24375.76 after dipping to 24254.93 earlier. Mainboard turnover increased to HK$83.86 billion compared with HK$74.3 billion on Monday.

Agencies

(China Daily 06/04/2008 page15)