Bloomberg News

Shanghai Stock Index Gains; Shanghai Electric, Sinopec Advance

February 27, 2006

Shanghai's key stock index rose for a third day. Shanghai Electric Power Co. gained after fourth- quarter profit more than tripled.

``It seems power suppliers can still pass on part of the cost of rising coal prices to users,'' said Zhao Zifeng, who oversees the equivalent of $250 million as head of research with China International Fund Management Co. in Shanghai.

The Shanghai Composite Index, which covers yuan-denominated A shares and foreign-currency B shares, rose 0.32 point to 1297.19 at the 3 p.m. local-time close after earlier slipping as much as 0.3 percent. The measure completed a three-day, 1 percent gain.

The Shenzhen Composite Index, which tracks the smaller market, fell 1.86, or 0.6 percent, to 314.45.

Shanghai Electric, supplier of a third of the electricity in China's richest city, increased 0.08 yuan, or 2 percent, to 4.12.

Fourth-quarter profit more than tripled to 138.9 million yuan ($17.27 million) from a year earlier, partly because of higher demand for heating. The four-quarter earnings were derived by subtracting the results for the first three quarters from full-year figures. Full-year net income was little changed at 398 million yuan.

China Petroleum & Chemical Corp. (600028), Asia's biggest oil refiner, also known as Sinopec, gained 0.11 yuan, or 2.1 percent, to 5.35. BP Plc won Chinese government approval to form a joint venture with Sinopec, which could give the U.K. company a 25 percent stake worth $14 billion in the Chinese oil company, the Observer reported, citing no one. Chen Ge, company secretary at Sinopec, denied the report.

Airlines Stocks

Airlines stocks fell after crude-oil prices jumped in New York, raising concerns higher jet fuel costs will crimp earnings.

The April contract jumped $2.37, or 3.9 percent, to $62.91 on Feb. 24, the biggest one-day gain since Sept. 19, after two bombs exploded outside Saudi Arabia's biggest oil refinery during a gun battle with security forces. The contract recently traded at $62.08 a barrel.

China Southern Airlines Co., the nation's biggest carrier by fleet size, slid 0.04 yuan, or 1.5 percent, to 2.62. China Eastern Airlines Corp., the nation's third-largest carrier by fleet size, fell 0.03 yuan, or 1.2 percent, to 2.55.

``Oil prices have put much pressure on earnings at airlines stock,'' said Zhao with China International Fund Management.

Shanghai Airlines Co., China's fifth-largest carrier, lost 0.04 yuan, or 1.5 percent, to 2.60. Hainan Airlines Co., China's fourth-largest carrier, lost 0.05 yuan, or 1.9 percent, to 2.64.

To contact the reporter on this story: Zhang Shidong in Shanghai at at szhang5@bloomberg.net

To contact the editor responsible for this story: Virginia Van Natta in Singapore at vvannatta@bloomberg.net


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