China Bumps Up Gas Prices, Oil Producers Surge

Before you go, we thought you'd like these...
Before you go close icon
Markets in Asia were mixed Wednesday. In Hong Kong the Hang Seng Index inched up 0.2% to 23,045 and in China the Shanghai Composite Index slid 0.9% to 2,878. Japan's Nikkei 225 Index lost 0.2% to end the day at 10,346.

An announcement from the NDRC, or the National Development and Reform Commission, that gas prices would rise by $46.55 per ton sent shares in oil companies soaring today. Gas prices in China are controlled by the government, and this is the third price hike this year, instituted in part to keep prices in line with global oil prices, and also to prevent excessive demand.

This is becoming more of an issue as individual car ownership explodes and consumption increases. "It is a choice made for the general economy and long-term development," the director of the China Center for Energy Economics Research at Xiamen University told People's Daily Online. "The purpose is to further reform the price-forming mechanism of resources and restrain excessive growth of domestic demand for refined oil."

In China, where salaries are often extremely low, even a minor price change can alter consumer behavior. "If the price of gas continues to rise, I will probably choose not to drive anymore," one driver told People's Daily Online. Today shares in China Petroleum, also known as Sinopec, shot up 2.4% in Hong Kong. Cnooc, the city's oil exploration darling, advanced 0.7% and PetroChina added 0.3%. Coal-based energy companies also gained with China Coal and China Shenhua both advancing 0.8%.

Investing in "A City Within A City"

Another big mover was Hong Kong real estate developer Cheung Kong, which rocketed up 3.5%. Li Ka-shing, Hong Kong's richest man and the company's chairman, plans to sell more than $1.5 billion in shares of a real estate investment trust. The scheme will be backed by the Oriental Plaza development in Beijing, described as a "city-within-a-city" covering about 1.1 million square feet and home to high end businesses like the five-star Grand Hyatt Beijing, a musical fountain and parking for 1,800 cars. If this deal goes through, it would constitute the first time a Hong Kong IPO were denominated in yuan, the Chinese currency, according to Bloomberg.

Other Hong Kong real estate companies also advanced with Hang Lung climbing 1.8%, China Resource Land gaining 1% and Henderson Land and Sun Hung Kai both rising 0.5%.

Sponsored Links
In China, energy producers also advanced with PetroChina gaining 0.7% and China Petroleum up 0.4%. Meanwhile, companies providing consumer staples closed lower. Shenzhen Agricultural Products tumbled 3.6% and Heilongjiang Agriculture, a grain company, declining 1.3%. Shares in China's major liquor producers also slumped with brewery Tsingtao falling 2% and Kweichow Moutai dropping 1.6%.

Chinese property companies gave back some of yesterday's stratospheric gains with Gemdale sliding 1.1% and China Vanke dipping 1.4%. Meanwhile, Poly Real Estate rose another 2%.

Nikkei Slips from Yesterday's High

In Japan, exporters struggled after the government predicted that the country's growth will slow down in 2011, in part thanks to the unstoppable surge in the value of the yen. Car companies slumped today with Mitsubishi Motor diving 2.4%, Isuzu falling 1.3%, Fuji Heavy down 1.1% and Toyota losing 0.3%.

Electronics exporters fared no better with Panasonic Electric plunging 4.6%, Pioneer and Olympus both plummeting 1.7% and Konica Minolta losing 0.5%.

There were a few bright spots, including a 4.8% gain by Alps Electric, a maker of electronic auto components and a surge of 7.6% in Aeon Mall after they released third quarter results showing that their net income was up 6.6% compared with last year.
Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners