Chongqing Stocks Drop After Bo Suspension: Shanghai Mover
Chongqing Brewery Co. (600132) led declines for shares of companies based in the southwestern municipality after Bo Xilai, the former top official in the city, was suspended from his Communist Party posts.
Shares of Chongqing Brewery dropped as much as 2.6 percent in Shanghai and were trading 1.2 percent lower at 28.01 yuan at the 11:30 a.m. local-time break. Chongqing Water Group Co. dropped 1 percent. Chongqing Road & Bridge Co. (600106) slid 1.5 percent. China’s benchmark Shanghai Composite Index declined 0.3 percent.
The official Xinhua News Agency reported late yesterday Bo was suspended from his posts in the Politburo and Central Committee after an investigation led to his wife being arrested on suspicion of murdering a U.K. citizen.
“Investors are concerned about some uncertainty in Chongqing,” said Li Jun, a strategist at Central China Securities Co. in Shanghai. “That may put some pressure on Chongqing-related companies.”
Bo’s suspension, which comes a month after he was removed as party secretary in Chongqing, adds to evidence that the party’s central leadership is repudiating his political legacy in one of the nation’s largest metropolitan areas. It also highlights the party’s goal of securing a stable once-in-a- decade leadership transition scheduled for later this year.
Gu Kailai, Bo’s wife, and a domestic helper are “highly suspected” of killing British businessman Neil Heywood, who died in Chongqing in November, Xinhua reported yesterday. The U.K. was originally told that Heywood died of alcohol poisoning.
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