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Index falls on concern over snowstorms
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Shanghai's key stock fell to the lowest since August 1 on concern the worst snowstorms in decades will reduce economic growth and push up inflation.

The Shanghai Composite Index, which tracks yuan-denominated A shares and hard-currency B shares, slid 1.43 percent, or 62.63 points, to 4,320.77.

Losers in the Shanghai market outnumbered gainers 734 to 92 while 12 were unchanged.

The Shanghai index tumbled 9.26 percent this week.

The Shenzhen Composite Index, which covers the smaller mainland stock market, lost 2.77 percent, or 36.37 points, to 1,274.92.

The snowstorms, the worst in 50 years, have led to production halts at factories and delayed deliveries of goods, adding additional woes to already weak market sentiment that has undermined investor confidence.

The storms may have cut steel production by 1.5 million metric tons in the country, said yesterday.

Coal producers and power-related companies fell on weather concerns.

Datang Power, the nation's second-biggest electricity producer based on market value, dropped the daily cap of 10 percent, or 1.61 yuan (22 US cents), to 14.50 yuan. Yanzhou Coal Mine Co, the listed unit of the country's fourth-biggest coal miner, sank 6.37 percent, or 1.25 yuan, to 18.36 yuan.

The extreme winter weather, including snowfalls, sleet and sudden temperature drops this month, will cut economic growth by half a percentage point, and push up inflation 0.3 of a percentage point, China Securities Journal said.

The blizzards have led to shortages of coal, electricity and oil, and will hurt the country's economy in the short term, Xinhua news agency said.

PetroChina, the nation's biggest oil company, slumped 3.36 percent, or 0.85 yuan, to 24.42 yuan. The company said one billion additional yuan-denominated shares will become tradable next week in Shanghai. Trading in the so-called A-shares will start February 5, it said in a statement. Institutional investors holding the company's stock can sell the shares three months after it was listed in Shanghai on November 5, it said.

China Petroleum & Chemical Corp, Asia's biggest oil refiner, also known as Sinopec, shed 3.07 percent, or 0.52 yuan, to 16.44 yuan. The company said today that it won regulatory approval to issue bonds with warrants amounting to 30 billion yuan.

Jiangxi Copper Co followed the slide among metal producers today.

Jiangxi Copper, China's second-biggest producer of the metal will shut down 43 percent of its smelting capacity because snowstorms led to power shortages and stalled transportation, Reuters reported, citing unidentified people. The shares lost 6.07 percent, or 2.67 yuan, to 41.34 yuan.

But China Coal Energy Co, the nation's second-largest coal producer, surged as much as 48 percent on its Shanghai trading debut after investors ordered close to 120 times the stock.

The shares rose as high as 24.89 yuan and jumped 31.91 percent, or 5.37 yuan, to finish at 22.20 yuan. The Beijing-based company sold 25.7 billion yuan of shares at 16.83 yuan each in the world's biggest stock sale this year so far.

Benchmark coal prices have risen to a record because of surging demand in China and supply disruptions in Australia and South Africa. China uses coal to produce four-fifths of its electricity. Investors ordered about 3.1 trillion yuan of China Coal's Shanghai shares, undeterred by a stock market that has retreated about 13 percent this year.

China Coal competes with bigger rival China Shenhua Energy Co, which raised 66.6 billion yuan in its Shanghai share sale last year. Shenhua almost doubled on its first day of trading on October 9.

President Hu Jintao yesterday called on coal miners to boost supplies as China battles the fallout from the worst snowstorms in more than 50 years.

Chian Coal is the first stock going for initial public offering this year. Tumbling equity markets prompted 25 companies last month to halt plans for initial public offerings, the most in at least a decade.

China Coal first traded in Hong Kong on December 19, 2006, and the shares have since surged more than four times, making it the third-best performing stock on the 48-member MSCI Asia Pacific Energy Index in the past year. Shenhua is the eighth best-performing stock.

(Shanghai Daily February 1, 2008)

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