By Laura He, MarketWatch
Oil and shipping shares surge
Hong Kong and Shanghai markets rallied on Monday, each hitting a
new seven-year high, as Chinese oil and shipping shares surged on
reports of possible mergers among China's largest state-owned
businesses.
The Hang Seng Index was up 1.3% to 28,433.59, its best close
since the end of 2007. The mainland-China-tracking Hang Seng China
Enterprises added 1.7%.
On the mainland itself, the Shanghai Composite Index advanced 3%
to 4,527.40, the first settlement above 4,500 since February
2008.
Oil and shipping shares rose sharply in both markets, after a
state media report said the Chinese government may cut the number
of central government-owned big companies through massive
mergers.
Beijing has been mulling a merger between PetroChina Co. and
China Petroleum & Chemical Corp. (Sinopec) (SNP), and between
Cnooc Ltd. (CEO) and unlisted China National Chemical Corp., the
report said. The merged companies would then be able to compete
better with international energy giants such as Exxon Mobil (XOM)
and BP PLC (BP) , the report added.
In Hong Kong, Sinopec leapt 7.2%, PetroChina jumped 6.7%, and
Connc Ltd. gained 2.3%. Sinopec Shanghai Petrochemical Co. Ltd. , a
Shanghai-based subsidiary of Sinopec, soared 19.5%. Oil and gas
explorer Sino Oil & Gas Holdings Ltd. surged 9.4%.
Top outperformers in the shipping sector included China Cosco
Holdings Co. Ltd. , improving by 13.1%, and China Shipping
Container Lines Co. Ltd. , cracking 9.1% higher.
Meantime, Sino-British banking giant HSBC (HSBC) -- the
heaviest-weighted component of the Hang Seng Index -- jumped 3.6%
after a report in the Sunday Times said the company is considering
plans to sell its British retail unit for 20 billion pounds ($30.4
billion). The gains added to a previous 4.2% rally, which came
after HSBC said it is looking at whether to move its headquarters
out of London.
In Shanghai, shares of several big oil and shipping companies
were suspended from trading after soaring limit-up by 10%. They
included Sinopec, PetroChina, China Shipping Container Lines, China
Cosco, and China Shipping Development Co. Ltd. .
Other Asian markets were mixed. Japan's Nikkei Average edged
down 0.2%, with the broader Topix flat. The yen (USDJPY) was a
little weaker, with the greenback buying Yen119.21, compared with
Yen118.99 late Friday in New York.
Seoul's Kospi Composite Index also inched 0.1% lower, while
Sydney's S&P/ASX 200 tacked on 0.8%.
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