China Petroleum, also known as Sinopec, slumped the most in five months. PetroChina Co. and China Shenhua Energy Co. dropped at least 1.3 percent as Brent crude sank 2.6 percent. Anhui Sun-Create Electronics Co., a radar maker, and Wuhan Guide Infrared Co. led gains by defense-related companies after the government imposed a protected air zone in the East China Sea. Ningbo Port Co. (601018) jumped 10 percent on speculation more cities will follow Shanghai in setting up free-trade zones.
The Shanghai Composite Index (SHCOMP) slipped 0.5 percent to 2,186.12 at the close. Sinopec, which has the fifth-biggest weighting on the gauge, said operations at its “super-large” production complex in the city of Qingdao will be disrupted after the crude pipeline blast. China traded barbs with the U.S. and Japan over the new air defense zone, as tensions escalated between Asia’s largest economies.
“Sinopec (601857) is a heavy-weighted stock so its decline has pressures the benchmark index,” said Wang Weijun, a strategist at Zheshang Securities Co. in Shanghai. “Military stocks are often event-driven. When there’s tension between China and Japan, they move a lot.”
The CSI 300 Index declined 0.4 percent to 2,388.63 today. The Hang Seng China Enterprises Index (HSCEI) slid 0.3 percent.
A measure tracking energy stocks sank 1.8 percent on the CSI 300.
Sinopec lost 4 percent to 4.85 yuan, its biggest drop since June 24. The explosion occurred after oil leaked from the pipeline into Qingdao’s municipal rainwater network. Xinhua News Agency, which reported the death toll, said 136 people are injured and 9 are missing.
PetroChina, the nation’s biggest oil company, dropped 1.5 percent to 7.98 yuan. Shenhua, the country’s largest coal producer, fell 1.3 percent to 16.56 yuan.
Crude retreated after Iran agreed to curtail nuclear activities in return for easing of some sanctions on oil, auto parts, gold and precious metals, the first major crack in a decade-long deadlock.
Anhui Sun-Create Electronics advanced by the 10 percent daily limit to 30.86 yuan. Wuhan Guide gained 10 percent to 18.81 yuan. China Spacesat Co. (600118) added 2.5 percent to 18.74 yuan.
The government announced an air defense identification zone in the East China Sea effective Nov. 23. Japan lodged a complaint as the U.S. and South Korea expressed concern about China’s actions. China’s Defense Ministry filed protests to both nations’ embassies, calling Japan’s remarks “unreasonable” and the U.S. comments “wrong,” according to a statement posted on the ministry’s website today.
Ningbo Port jumped 10 percent to 2.54 yuan. Tianjin Port Co. climbed 3 percent to 9.61 yuan. Rizhao Port Co. (600017) advanced 4.4 percent to 2.82 yuan.
The State Council has approved the Dongjiang free-trade zone in Tianjin, the Shanghai Securities News reported on its website, citing Zheng Xinli, vice chairman of the China Center for International Economic Exchanges. The council also approved a free-trade zone in the eastern province of Zhejiang, the report cited Zheng as saying.
The China Securities Journal also reported today the government may allow Guangdong and Tianjin to set up their own free-trade zones.
“It looks like more places will follow Shanghai’s steps in setting up free-trade zones and that has exceeded market expectations,” said Wang of Zheshang Securities. “The market had expected Shanghai to be the only free-trade zone in China in the near future.” 11 are missing.
The Shanghai Composite is down 3.7 percent this year and trades at 8.6 times projected profit for the next 12 months, compared with the seven-year average of 15.3, according to data compiled by Bloomberg.
To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at firstname.lastname@example.org