Shanghai gauge falls on power concerns
Source: Shanghai Daily |
May 21, 2011, Saturday
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Print Edition
Print Edition
SHANGHAI'S key stock index yesterday fell for the second straight day, on tepid performances by electricity producers, amid concerns power shortages will hurt economic growth.
The Shanghai Composite Index edged down 0.04 percent to 2,858.46 points. Turnover shrank to the lowest in four months at 84 billion yuan (US$12.9 billion).
The gauge lost 0.4 percent this week, its fourth decline in five weeks.
"Power shortages are a major problem that may drag China's economic growth for the short term, as it will restrict manufacturers' production and increase their operating costs if prices rise in some areas," said Mei Luwu, a Shenzhen-based fund manager of Lion Fund Management Co.
Also, a nationwide increase of China's power prices is "unlikely," the China Securities Journal reported yesterday, citing China State Grid Corp's Vice President Shu Yinbiao. Price adjustments will depend on each province, the journal quoted Shu as saying.
The country may face a summer shortage of 30 gigawatts as supply lags behind demand growth, the China Electricity Council said earlier.
Huaneng Power International Inc dropped 2.1 percent to 6.10 yuan, its lowest close since April 29.
But the utility sector could be a good time for investments after being in negative territory for a while, said Zuo Jianming, an analyst at Oriental Securities Co.
"They can be defensive investments when inflation is at high levels," Zuo said.
The Shanghai Composite Index edged down 0.04 percent to 2,858.46 points. Turnover shrank to the lowest in four months at 84 billion yuan (US$12.9 billion).
The gauge lost 0.4 percent this week, its fourth decline in five weeks.
"Power shortages are a major problem that may drag China's economic growth for the short term, as it will restrict manufacturers' production and increase their operating costs if prices rise in some areas," said Mei Luwu, a Shenzhen-based fund manager of Lion Fund Management Co.
Also, a nationwide increase of China's power prices is "unlikely," the China Securities Journal reported yesterday, citing China State Grid Corp's Vice President Shu Yinbiao. Price adjustments will depend on each province, the journal quoted Shu as saying.
The country may face a summer shortage of 30 gigawatts as supply lags behind demand growth, the China Electricity Council said earlier.
Huaneng Power International Inc dropped 2.1 percent to 6.10 yuan, its lowest close since April 29.
But the utility sector could be a good time for investments after being in negative territory for a while, said Zuo Jianming, an analyst at Oriental Securities Co.
"They can be defensive investments when inflation is at high levels," Zuo said.
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