Chinese investors got their first opportunity to react to a plan for consolidating the nation’s two state-owned shipping groups when shares of their listed units resumed trading yesterday.
They promptly pushed two of the stocks down by the daily limit in Shanghai trading while bidding another up by as much as 8 percent.
Shares in China Shipping Container Lines Co (中海集運) ended trading down 4.2 percent and China Cosco Holdings Co (中國遠洋) declined 4.8 percent after both had earlier fallen by as much as the 10 percent daily limit on concern the Chinese government plan announced on Dec. 11 would not improve their profitability.
China Shipping Development Co (中海發展), which would swap its money-losing dry bulk business for the profitable energy shipping segment, saw its shares move 6.2 percent higher at the close.
The Hong Kong-listed shares had already begun trading earlier this month. The benchmark Shanghai Composite Index rose 0.4 percent yesterday.
China Shipping Development’s earnings should be “significantly enhanced” by the plan, Deutsche Bank AG analysts led by Sky Hong (洪天豐) wrote in a note on Monday last week.
They called the disposal of its dry bulk operations “a big positive surprise.”
The shares had been suspended for almost five months in Shanghai as Chinese authorities worked out how to make parent companies China Ocean Shipping Group (中遠集團) and China Shipping Group (中海集團) more competitive in an industry that has been hit by overcapacity.
Authorities announced on Dec. 11 that their assets would be reorganized to form four listed units, each focused on a specific aspect of the shipping business: containers, financing, terminals and oil and gas.
China Cosco Holdings would be the listed entity for container shipping, China Shipping Container Lines for shipping financial services, while China Shipping Development would assume the oil and gas transportation business. Cosco Pacific Ltd (中遠太平洋), which is listed in Hong Kong, would focus on the terminal business.
More specific details, including whether China Ocean Shipping Group and China Shipping Group will become one entity, have yet to be released.
Cosco Pacific resumed trading on Dec. 14, as did the Hong Kong-traded shares of China Cosco Holdings, China Shipping Container Lines and China Shipping Development. The Shanghai shares did not resume trading until yesterday because of additional queries from the exchange that they had to address.
Overall, China’s stocks capped a second week of gains, led by real-estate and consumer companies, amid speculation the Chinese government will take more measures to stem an economic slowdown.
The Shanghai Composite Index rose 1.4 percent this week and traded 0.4 percent higher at 3,627.91 at the close yesterday.
The CSI 300 Index added 0.2 percent as gains for consumer shares overshadowed losses for shipping companies. Hong Kong’s bourse was closed for the holidays.
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