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Shares witnesses jump, spurred by power sector ( 2003-11-04 08:39) (China Daily)
China's shares closed higher on yesterday, galvanized by a surge in power stocks after a giant IPO by a firm spearheading the Three Gorges Dam project brought the country's crackling electricity sector into focus, brokers said. The benchmark Shanghai composite index, grouping hard-currency B shares for foreigners and yuan-denominated A shares, jumped 1.17 per cent to 1,364.055 points. The Shenzhen's rose 69.72 points, or 2.2 per cent, to 3237.06. Southeast Power, one of China's largest listed power firms, was the most active B-share counter, soaring 7.18 per cent to 76.1 US cents after it announced its third-quarter net profit had more than doubled year-on-year. Yangtze Electric Power Co Ltd plans to issue 2.326 billion A shares this week to raise a net 9.83 billion yuan (US$1.19 billion) to help fund the US$25 billion Three Gorges Dam project. The company has kicked off initial sales to institutions and will jumpstart secondary market subscription tomorrow. Analysts expect its IPO to spark strong interest due to booming power consumption, a corollary to galloping economic growth that has left the country desperate for electricity. "Yangtze Electric has ignited investors' interest in the broader power sector, as many other power firms also profit from the electricity consumption boom," said broker Dai Yizhong at Guotai Junan Securities. Hunan Huayin Electric was the top gainer in Shanghai, rising 9.61 per cent to 4.79 yuan (57.9 US cents), while Xichang Power gained 5.61 per cent to 5.46 yuan (66.0 US cents). But analysts said a shortfall of funds would prevent the broader market from staging a stronger rebound in the near term. "Institutions typically need to prepare cash for annual book settlements at the end of the year, straining liquidity," said senior analyst Zheng Weigang at Shanghai Securities. Yangtze Electric had planned to issue shares in September, but regulators forced it to delay the sale as the market was already straining under other offers. Despite rallies in other Asian markets, the Shanghai index has shed 16.4 per cent since mid-April, hit by negative factors that include a government-ordered tightening of bank loans. The Shanghai B share index yesterday surged 5.81 per cent to 112.659 points, while its Shenzhen counterpart jumped 4.62 per cent to 275.64. Shanghai copper futures rose to new peaks yesterday as the London Metal Exchange hovered at six-year highs, but traders doubted the domestic market would continue to outperform the LME for long. Shanghai's most active April contract rose 370 yuan (US$44.7) to 21,900 yuan (US$2,646), while most other contracts gained 240 yuan (US$29.0) to 520 yuan (US$62.9). Volume rose further to 382,144 lots from Friday's hefty 358,652 lots. "Shanghai prices have risen too high as people have been performing arbitrage trade. But market fundamentals, such as actual Chinese demand, may not be able to support these levels in the long term," said a trader in Shanghai. LME three-month copper was quoted at US$2,070/US$2,074 a ton by Asian trade yesterday, maintaining its six-year peak and staying above the US$2,067 London kerb close on Friday. China's yuan ended one notch weaker versus the US dollar at 8.2767 yesterday, near the stronger end of its managed trading range.
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