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Shares of power producers give up gains after remarks

SHARES in the listed units of the top five Chinese electricity producers gained yesterday after a media report said the government would inject 10 billion yuan (US$1.5 billion) into the struggling power sector.

But the stocks gave up most of their gains after analysts said the listed firms, with their stronger finances and lower debt level, may not be included in the bailout package.

Huaneng Power International Inc, the largest, surged as much as 5 percent before closing 1.4 percent down at 7.04 yuan in Shanghai. In Hong Kong, it rose 2.3 percent to HK$4.9 (63 US cents) after jumping 5.22 percent at one stage. Datang International Power Generation Co rose 4.44 percent higher to 7.05 yuan after soaring 9 percent and its H shares rose 5.41 percent to HK$3.51 after surging 8.4 percent.

The five national power firms led by Huaneng Group, parent of Huaneng Power, and two state power distributors will receive the cash aid from the State-owned Assets Supervision and Administration Commission, the China Business Journal reported. Previous reports said the power producers may lose 70 billion yuan last year.

"The 10 billion yuan is like a drop in the bucket. And the government won't directly inject capital to the listed companies but their state-owned parents," said Lu Yanzhong, an analyst at Hunan Jinzheng Investment Consulting.


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