Bloomberg News

China's Stock Index Is Little Changed; Sinopec Advances

August 03, 2006

China's key stock index closed little changed. China Petroleum & Chemical Corp. (600028) paced gains among the most valuable listed companies as some investors judged recent share-price declines excessive given the outlook for earnings.

``We are seeing a comeback as the market is a bit oversold in recent days,'' Zhao Zifeng, who oversees the equivalent of $1.1 billion with China International Fund Management Co. in Shanghai. ``We are still upbeat about the market.''

Gains were limited on concern the domestic stock sales of Air China Ltd. will cut the value of existing equities by diverting capital.

The Shanghai Composite Index, which covers yuan-denominated A shares and foreign-currency B shares, added 0.19 point to 1601.06 at 3 p.m. local-time close. The measure lost 5.1 percent in the past five days. The Shenzhen Composite Index, which tracks the smaller market, lost 1.33, or 0.3 percent, to 398.52, taking its decline over seven days to 8.2 percent.

China Petroleum, Asia's biggest oil refiner, also known as Sinopec, rose 0.09 yuan, or 1.6 percent, to 5.90. Separately, the company started constructing a 1 billion yuan ($125 million) chemical plant in Shanghai to tap the nation's demand for plastics, the state-owned Assets Supervision and Administration Commission said on its Web site today.

China Merchants Bank Co., the nation's second-largest publicly traded lender, advanced 0.17 yuan, or 2.3 percent, to 7.49. Shanghai Zhenhua Port Machinery Co., China's biggest maker of cranes used to load and unload ship container cargoes, gained 0.23 yuan, or 2.5 percent, to 9.56.

Air China, the country's largest international carrier, aims to raise as much as 7.97 billion yuan selling as many as 2.7 billion local-currency shares to buy aircraft.

``The pace of new share sales is quite fast and that has put pressure on the market by draining liquidity,'' said Zhao with China International Fund Management.

Crude Oil

Carriers such as China Eastern Airlines Corp. dropped on concern higher jet fuel prices will dent earnings.

China Eastern, the nation's third-largest carrier by fleet size, dropped 0.05 yuan, or 2 percent, to 2.52.

Jet fuel prices rose 1.8 percent to $89.15 in Singapore yesterday, the highest since July 17. Prices are up 22 percent from a year earlier.

Crude oil rose as much as 0.5 percent to $76.19 a barrel in after-hours trading in New York, rising for a fourth day, on concern a tropical storm may threaten U.S. oil fields in the Gulf of Mexico amid near-record gasoline demand. The contract added 1.2 percent to $75.81 a barrel yesterday, the highest close since July 14.

Shanghai Airlines Co., a regional carrier, lost 0.03 yuan, or 1.3 percent, to 2.37.

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

To contact the editor responsible for this story: James Regan at jregan8@bloomberg.net


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